In a report released on Tuesday (May 7), Standard Chartered Bank pointed out that the Federal Reserve's monetization of government debt has heightened the risks associated with the dominance of U.S. fiscal policy. As investors seek alternative assets, this scenario should support a rise in Bitcoin. The bank noted that a Trump victory as the Republican presidential candidate would be beneficial for Bitcoin, setting a year-end target price of $150,000.
The report stated, "We believe that Trump's second administration will have broadly positive impacts through a more supportive regulatory environment."
Geoff Kendrick, an analyst at Standard Chartered, wrote, "In an environment dominated by U.S. fiscal policy, we believe Bitcoin will serve as a good hedge against de-dollarization and a decline in confidence in the U.S. Treasury market."
Kendrick added that the dominance of U.S. fiscal policy could have three key impacts on the U.S. Treasury yield curve: "A steeper nominal 2-year/10-year curve, a greater increase in breakevens than in real yields, and a rise in term premiums."
"Bitcoin prices have already increased, showing positive correlations with all three potential developments," he mentioned.
Standard Chartered further highlighted that if Trump wins the presidential election in November, the second administration could accelerate the withdrawal of foreign official U.S. Treasury buyers due to fiscal issues. It noted that during his first term, the average annual net sale of U.S. government debt was $207 billion, compared to just $55 billion during Biden's presidency.
The report added, "Beyond the passive boost of de-dollarization for Bitcoin, we anticipate that Trump's second administration will actively support Bitcoin and broader digital assets by easing regulations and approving U.S. spot ETFs."
Standard Chartered reiterated its year-end Bitcoin target price of $150,000, with a 2025 year-end target of $200,000.
Despite Standard Chartered's optimistic outlook, JPMorgan seems to have a different perspective.
Umar Farooq, CEO of JPMorgan's blockchain division, Onyx, criticized public ledgers like Bitcoin and Ethereum for being unsuitable for large transactions during his appearance at the Bank for International Settlements Innovation Summit held in Basel, Switzerland, on Monday.
He stated, "What if something goes wrong? Who do I sue? You can trust the code, but there is no code court."
He explained that while public chains like Ethereum process millions of transactions daily, they are not secure enough for high-value transactions between banks and financial institutions. The system must enable trusted transactions between financial institutions with some form of accountability.
However, we know that centralized systems have proven to be less reliable. While some new decentralized finance (DeFi) projects may carry risks of failure, the underlying technologies of Bitcoin and Ethereum are currently the most trustworthy systems on the market. Can one definitively say who is responsible if something goes wrong? Clearly, Farooq may have made these comments out of self-interest.
Previously, the Bank for International Settlements (BIS) proposed creating a "new financial market infrastructure" known as a Unified Ledger, integrating central bank digital currencies (CBDCs), digital assets, and tokenized bank deposits. Farooq believes that this unified ledger, connecting central banks and other major financial institution platforms, is indispensable for handling transactions worth millions or billions of dollars.
Wall Street giants are investing heavily in crypto assets, governments are competing to issue CBDCs, and financial institutions are racing to enter the field of financial asset tokenization to revolutionize the financial system. Without interoperability, however, the global ecosystem and its liquidity could be fragmented.
Therefore, Farooq called for the unified ledger to become a global layer for the movement of global funds; otherwise, it will be isolated.
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