Investment bank Standard Chartered said in a research note on Tuesday that the risk of U.S. fiscal dominance due to the Federal Reserve's monetization of government debt is increasing, and such a scenario is likely to lead to cryptocurrencies as investors seek alternative assets. He said it should be of assistance to the
Donald Trump could also be a boon for cryptocurrencies. “We believe the second Trump administration will be largely positive with a more supportive regulatory environment,” the report said. “In a US fiscal dominance scenario, we believe Bitcoin (BTC) is a good hedge against de-dollarization and declining confidence in the US Treasury market,” said analyst Jeff Kendrick.
U.S. fiscal dominance is likely to have three effects on the U.S. Treasury curve: a steeper nominal 2-year/10-year curve, a larger increase than the breakeven real yield, and an increase in the term premium. ”, Kendrick said, adding that the price of Bitcoin has increased. These he is positively correlated with all three potential developments.
The bank said that if Mr. Trump wins the election, a second administration could accelerate the withdrawal of official foreign buyers of U.S. Treasuries due to fiscal concerns. It pointed out that the annual average net sales of government bonds was only $207 billion, compared to $207 billion. $55 billion under President Biden's administration.
“In addition to the passive push for BTC through de-dollarization, we expect the second Trump administration to actively support BTC (and broader digital assets) through deregulation and approval of US spot ETFs.” the report added. Standard Chartered has reiterated its year-end Bitcoin target of $150,000 and $200,000 by the end of 2025.
