Bitcoin‘s (CRYPTO: BTC) sharp pullback from its record high just under $100,000 has sparked concern among traders, with Standard Chartered‘s Geoffrey Kendrick attributing the correction to several factors, including a reduction in U.S. Treasury term premium and upcoming options expirations.
What Happened: According to Kendrick, the significant reduction in U.S. Treasury term premium following President-elect Donald Trump's Treasury Secretary announcement triggered Bitcoin's decline.
In a note sent to Benzinga, he explained that Bitcoin is often viewed as a hedge against traditional financial issues, and lower term premiums undermine its appeal in this role.
Data from the New York Fed, which tracks term premium movements, supports the connection between recent Treasury market activity and the crypto market’s performance.
"Bitcoin thrives on uncertainty in traditional finance. When Treasury term premiums drop, that hedge utility temporarily diminishes," Kendrick noted.
Further adding to the downward pressure are the substantial monthly options expiries scheduled for Friday.
Data from Deribit highlights that BTC options with strike prices ranging from $85,000 to $100,000 account for over 18,000 BTC in open interest.
Historically, options expirations have constrained price movement, with traders positioning themselves around these key levels, creating a magnet effect on spot prices.
Kendrick predicts a potential drop below $88,700—the average purchase price for ETFs and MicroStrategy (NASDAQ:MSTR) since the U.S. elections.
This could lead Bitcoin to test its critical support zone between $85,000 and $88,700 before resuming its uptrend.
Despite the retracement, institutional interest remains robust.
ETFs have recorded inflows of approximately 77,000 BTC since the U.S. elections, while MicroStrategy has acquired an additional 134,000 BTC.
However, Kendrick cautions that the recent influx of institutional buying at an average price of $88,700 could serve as a temporary ceiling until broader market dynamics shift.
Why It Matters: Bitcoin’s pullback has also affected the wider crypto market.
BTC's decline from $98,500 to $93,500 coincided with a dip in overall market capitalization from $3.5 billion to $3.35 billion.
Futures markets saw over $500 million liquidated during the volatility, reflecting heightened risk aversion.
Kendrick maintained his year-end target of $125,000 for Bitcoin and a 2025 projection of $200,000.
He sees the current retracement as a necessary correction, driven by macroeconomic factors and technical market events.
"We are still in a structural bull market," Kendrick emphasized. "Once these short-term headwinds subside, Bitcoin is well-positioned to resume its upward trajectory."
Price Action: According to CoinGecko data, Bitcoin is currently trading at $93,440, down 1.5% for the day after making a high of $99,645 on Nov. 22.
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