Standard Chartered Identifies Three Key Indicators Signaling Bitcoin Cycle Bottom, Eyes Strategy Update
Geoff Kendrick of Standard Chartered declares the crypto winter has ended, indicating that digital asset valuations have reached their cyclical trough, with Strategy's Bitcoin acquisition announcement expected soon.
In a Friday communication with clients, Geoff Kendrick, an analyst at Standard Chartered, expressed his conviction that digital asset valuations have reached their cyclical trough, and he's monitoring three key signals for confirmation: an anticipated announcement from Strategy regarding additional Bitcoin acquisitions from the previous week; positive capital flows into cryptocurrency exchange-traded funds (ETF) recorded on Friday; and, a continued downward trajectory in oil market prices.
"We have now seen the low in crypto asset prices for the cycle. That would be USD59k for BTC (53% down from USD126k high)," Kendrick said in a brief note to clients on Friday. The leading cryptocurrency was trading around $63,704 as of Sunday, based on CoinMarketCap data.
Based on how market participants interpret Strategy CEO Michael Saylor's near-weekly social media post published early Sunday, the initial indicator Kendrick is monitoring may have already materialized.
"Still adding dots," was Saylor's message that accompanied the now-familiar dot, or bubble, chart that the Strategy executive frequently includes in his social media posts teasing forthcoming BTC purchases.
Regarding the additional signals of a Bitcoin floor that the global head of digital assets research at StanChart referenced, exchange-traded funds focused on Bitcoin recorded a single-day net capital inflow of $85.84 million on Friday, with capital flowing into five of these investment vehicles while eight of the US-listed BTC ETFs experienced zero net movement, based on information compiled by SoSoValue.com. Crude oil futures contracts declined on Friday, marking the second consecutive session of losses, based on Yahoo Finance data.
Kendrick closed his note with: "Winter is over. Welcome back to crypto Spring."
Surprise Bitcoin sale defended as "necessary" defense of digital credit
In a filing submitted to the US Securities and Exchange Commission on June 1, Strategy revealed its first documented Bitcoin divestment since 2022, selling 32 BTC in a transaction that seemed to contradict Saylor's longstanding "never sell your Bitcoin" philosophy. He justified the transaction, explaining that maintaining the capacity to liquidate the asset is essential for the continued issuance of "digital credit."
"If the company's policy is that we won't sell the Bitcoin, then the credit won't have value and the equity won't have value," he told Cointelegraph at the BTC Prague conference.
According to Saylor, companies utilizing Bitcoin as a treasury asset must preserve the capability to liquidate their positions when required to back dividend-distributing securities and other credit instruments backed by BTC.