According to a report by CoinDesk, Standard Chartered Bank stated in a research report on Tuesday that the increasing dominance of the US government in monetizing its debt poses a risk, which should benefit cryptocurrencies as investors seek alternative assets. The bank’s analysts wrote in the report that the risk of US government dominance is likely to have three effects on the US Treasury curve: a steeper nominal yield curve between the two-year and ten-year periods, an increase in breakeven inflation rates surpassing actual yields, and an increase in term premiums. The price of Bitcoin is positively correlated with these potential developments.
In addition, the Standard Chartered Bank analysts also pointed out that Donald Trump could potentially become a major catalyst for the rise of cryptocurrencies because the second Trump administration is expected to provide a more favorable regulatory environment, which will have an overall positive impact on cryptocurrencies.
The analysts noted that if Trump wins a second term in office, the withdrawal of foreign official US Treasury buyers due to fiscal issues may accelerate. During his first term, the average annual net sales of US government debt amounted to $207 billion, while under President Biden, it was only $55 billion.
Furthermore, Standard Chartered Bank reiterated its year-end target price of $150,000 for Bitcoin, as well as its target price of $200,000 by the end of 2025.
