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Standard Chartered says buy bitcoin on weakness

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Standard Chartered says buy bitcoin on weakness
  • Analysts expect a shift from a “loss-of-hope” phase to “buying the dip”.
  • The 30 January meeting of the the Fed and Big Tech earnings will be pivotal for market direction.
  • Arizona’s Senate Finance Committee has passed a bill to create a bitcoin reserve.

Bitcoin’s slide, driven by the DeepSeek factor, should be viewed as a buying opportunity ahead of potential market stabilisation, Standard Chartered has concluded, writes The Block.

Analysts noted the asset’s “painful correlation” with the Nasdaq index and flagged earnings from Microsoft, Meta and Tesla due on 29 January, as well as a meeting of the the Fed.

“The risk lies in continued selling of high-technology stocks, which would push the first cryptocurrency down to the next important support levels. In particular, the average purchase price of ETF after Donald Trump’s election victory is $96,400,” the review said.

They also pointed to market uncertainty after the US president signed an executive order to create a working group on digital-asset markets.

“The disappointment was twofold. First, it spoke of a ‘stockpile’ rather than a ‘reserve’, which suggests seized rather than purchased assets. Second, any further steps require the involvement of Congress, which will take some time,” the experts explained.

The market has thus gone through a “loss-of-hope” reaction, reducing the risk of a deeper correction and paving the way for a shift to a “buy-the-dip” phase.

Earlier, analysts forecast “digital gold” and Ethereum could reach $200,000 and $10,000, respectively, by year-end on institutional demand via ETFs, with a “light” altcoin season as attention concentrates on the main cryptocurrencies.

Update:

Fundstrat co-founder Tom Lee called the 27 January sell-off in US equities an “overreaction”. He urged investors to look at Nvidia, calling it “the biggest buying opportunity since the pandemic”.

The Financial Times compared Nvidia’s share performance with Cisco, noting similarities up to the point of the dot-com crash in 2021.

Data: Financial Times.

A seed of doubt

QCP Capital questioned whether bullish sentiment can return without confirmation of a Strategic Bitcoin Reserve.

They pointed to the options market, where the skew shifts in favour of calls starting with March expiries. The picture could change if Trump seeks to “play the hero” to neutralise the DeepSeek effect, they added.

In their view, markets are nervously awaiting the Fed meeting scheduled for 29 January. Investors are watching for possible changes in monetary policy that could affect financial markets.

“Bitcoin should remain relatively resilient as prices stay within a familiar range,” the comment said.

A US bitcoin reserve: now more than rhetoric

On 28 January the Arizona Senate’s Finance Committee approved a bill allowing state funds to be invested in digital gold and other cryptocurrencies.

The document has moved to the upper chamber’s Rules Committee, which will set parameters for debate and amendments. If the full Senate approves it, the bill will go to the House of Representatives.

According to Dennis Porter, co-founder and CEO of Satoshi Action Fund, Arizona is the first state where a legislative committee has backed the initiative.

He estimates that 15, or even 16, states are considering creating a bitcoin reserve, up from zero just three months ago.

Earlier, drafting of bills to launch a bitcoin reserve began in, among others, the legislatures of Ohio and Texas.

In January, mining firm MARA reported lobbying for the initiative across all 50 states and the US federal government.

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