Geoff Kendrick, a digital assets researcher at the British multinational bank, predicts Bitcoin could drop further, potentially bottoming out at $88,700 in the short term. The reason? The market’s reaction to U.S. President-elect Donald Trump’s pick for Treasury Secretary, hedge fund manager Scott Bessent.

Source: BNC Bitcoin Liquid Index

The Treasury Connection

Kendrick attributes Bitcoin’s sudden dip to a “post-Bessent announcement reduction in U.S. Treasury term premium.” Since Bessent’s appointment, U.S. Treasuries have rallied, with yields on five- to 30-year maturities dropping by more than 10 basis points.

As a fiscal conservative, Bessent is widely expected to implement policies that stabilize traditional financial markets. His reputation, coupled with Trump’s campaign promises of deregulation and tax cuts, has reassured investors—at least for now—shifting attention back to traditional assets like Treasuries.

“Bitcoin’s rally could slow in the short term,” Kendrick wrote, “because one of its core uses is as a hedge against traditional finance issues, such as instability in the banking sector or government fiscal policy.” With Treasury markets rallying, Bitcoin’s appeal as a safe haven asset may temporarily wane.

The Inflation Hedge Narrative

Bitcoin has long been touted as a hedge against inflation and poor government monetary policies. During Trump’s campaign, his aggressive stance on tariffs fueled fears of higher inflation, which historically dampens the appeal of U.S. Treasuries. But with Bessent expected to steer a more measured fiscal approach, inflation fears have subsided, leading to a rebound in Treasuries and reducing Bitcoin’s immediate allure.

Trump’s surprise victory on November 5 initially sparked a massive Bitcoin rally, pushing prices from under $70,000 on election night to an all-time high of $99,645 within days. Investors anticipated a crypto-friendly administration, with promises of regulatory reform and support for digital assets further boosting market sentiment. However, the rally hit a wall just shy of $100,000, triggering this week’s sharp reversal.

Despite the short-term headwinds, Kendrick remains bullish on Bitcoin’s long-term potential. He forecasts that Bitcoin could rebound to $125,000 by the end of 2024 and reach a staggering $200,000 by the end of 2025 as broader adoption and regulatory clarity drive the market forward.

“Bitcoin has room to grow,” Kendrick wrote, noting that its fundamentals remain strong despite temporary shifts in investor sentiment.

Broader Implications for the Market

The interplay between Bitcoin and traditional markets highlights the growing complexity of the cryptocurrency ecosystem. With Bitcoin now firmly integrated into broader financial systems, its price is increasingly influenced by traditional market dynamics, such as Treasury yields and government appointments.

The near-miss at $100,000 underscores the cryptocurrency’s volatility and the unpredictability of its price movements. However, it also signals the asset’s resilience and its growing role in the portfolios of both retail and institutional investors.

Bitcoin’s brush with the six-figure milestone may have ended in a short-term setback, but the story is far from over. As the market absorbs the implications of a Trump presidency and a conservative Treasury Secretary, Bitcoin’s status as a hedge and a growth asset will likely come under renewed scrutiny. While the coming weeks may test the resolve of Bitcoin investors, the long-term trajectory remains upward—at least according to Standard Chartered.