Geopolitical risks could drive bitcoin below $60,000, creating buying opportunity, Standard Chartered analyst says

Standard Chartered's global head of digital assets research Geoff Kendrick said that while risks in the Middle East may drive bitcoin lower, investors should consider it a buying opportunity due to Donald Trump's rising chances in the U.S. presidential election race.

"Risk concerns related to the Middle East seem destined to push bitcoin below $60,000 before the weekend, but, positions like the $80,000 call options highlighted here and the circularity vis-à-vis Trump probabilities suggests the dip should be bought into," Kendrick said in a note.

He observed that the odds in the U.S. presidential race between Donald Trump and Kamala Harris have shifted slightly this week. Trump's chances have increased by about 1%, while Harris's have dropped by the same amount. As a result, Harris's likelihood of winning the November election now stands at 49%, whereas Trump's has risen to 50%.

"This creates an interesting circularity for bitcoin," Kendrick explained. "Geopolitical concerns may push prices lower, yet these very concerns seem to increase Trump's odds, potentially improving bitcoin's post-election outlook."

A Trump victory is seen as favorable for cryptocurrencies, particularly given his engagement at Bitcoin 2024 and his announcements regarding a decentralized finance (DeFi) project called World Liberty. Analysts anticipate that Trump's administration would accelerate progress on pro-crypto policies.

In contrast, many analysts believe that a Harris victory could be bearish for bitcoin, possibly delaying anticipated regulatory advancements. Kendrick noted, "A Harris victory would likely trigger an initial price decline, but we would expect investors to buy the dips as the market recognizes that progress on the regulatory front will still be forthcoming."

Bitcoin options market shows medium-term optimism

The research analyst highlighted that recent market activity has shown a significant influx of bitcoin call option positions. This growing demand for call options suggests that many traders are betting on upward price movements, which can contribute to a positive market outlook for bitcoin.

"The amount of call option open interest for the 27 December expiry at a $80,000 strike price on Derebit jumped by 1300 bitcoin over the last two days," he added.

Kendrick emphasized that bitcoin has not acted as a safe haven against geopolitical tensions. "Gold is a geopolitical hedge. Bitcoin is a hedge against traditional finance issues such as bank collapses or de-dollarisation/U.S. Treasury sustainability issues," Kendrick added.

Bitcoin’s price has decreased by around 0.8% in the past 24 hours and was sitting at around $60,638 at 5:53 a.m. ET, according to The Block’s Bitcoin Price Page.