Bitcoin's Primary Function Is to Hedge Against Risks to the Financial System, Says Geoffrey Kendrick of Standard Chartered

Geoffrey Kendrick of Standard Chartered has highlighted Bitcoin's primary function as a hedge against risks to the financial system, underpinned by its decentralized ledger.

Investing.com - Standard Chartered’s Geoffrey Kendrick explained that Bitcoin is fundamentally a hedge against risks to the financial system, a property it derives from its decentralized ledger.

This protection comes in two forms: private sector risks, like the collapse of Silicon Valley Bank in March 2023, and government sector risks, which include those to the US Treasury.

Kendrick adds that outside of these risk periods, Bitcoin’s trading pattern usually follows that of major tech stocks, known as the Magnificent Seven (Mag7).

Current concerns about the Federal Reserve’s independence, especially with the potential replacement of Jerome Powell, fall into the category of government sector risks.

The impact of these government-related risks is measured by the US Treasury term premium, which has reached a 12-year high for the 10-year term premium. Since early 2024, the correlation between Bitcoin and the term premium has been particularly strong.

Recently, Bitcoin has not been keeping pace with the rise in the term premium. Kendrick attributes this lag to the previous narrative that tariffs would negatively affect tech stocks, and Bitcoin tends to follow their performance.

But as long as issues with the Fed’s independence remain, Kendrick believes Bitcoin will continue moving up, potentially reaching new all-time highs.

Reporting his forecasts for Bitcoin, Kendrick still sees it hitting $200,000 by the end of 2025 and $500,000 by the end of 2028. He adds that the dominant narratives around Bitcoin change over time, and the cryptocurrency serves multiple roles in investment portfolios.

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