Standard Chartered forecasts $500,000 Bitcoin price as confidence in government bonds dwindles

Bitcoin (BTC) briefly traded above $107,000 on Tuesday after Standard Chartered's Geoffrey Kendrick reaffirmed the bank's $500,000 price target by 2029, citing growing institutional and government exposure through Strategy's stock holdings. Meanwhile, KKR & Co. released a new report stating that government bonds are losing their effectiveness as a hedge during risk-off periods amid rising US and Japanese bond yields.

Bitcoin could reach $500,000 at the end of Trump's tenure: Standard Chartered

Bitcoin is expected to hit a milestone of $500,000 before the end of US President Donald Trump's term in 2029, according to Standard Chartered's Global Head of Digital Assets Research Geoffrey Kendrick.

Kendrick highlighted that the recent increase in Securities and Exchange Commission (SEC) Q1 13F data, which revealed a rise in government and institutional exposure to Bitcoin, supports their claim.

"The quarterly 13F data is the best test of our thesis that BTC will attract new institutional buyer types as the market matures, helping the price reach our USD 500,000 target level," Kendrick said in a report to investors on Tuesday.

13F filings are mandatory quarterly reports submitted by investment managers, particularly those with over $100 million in assets, to the SEC disclosing their US equity holdings.

Kendrick pointed out that ETF exposure among these institutions declined in Q1, while those gaining exposure through Strategy shares were "very encouraging." He shared that the exposure results from Strategy shares being seen as a proxy for Bitcoin investment.

"We believe that in some cases, MSTR holdings by government entities reflect a desire to gain Bitcoin exposure where local regulations do not allow direct BTC holdings," he added.

Standard Chartered's proposal reflects the growing influence of Strategy's Bitcoin playbook on traditional corporations, many of which are exploring direct or indirect exposure to BTC. 

Strategy's substantial holdings and its method of acquiring Bitcoin through debt and equity offerings have effectively positioned its stock as a proxy for Bitcoin exposure, making it an accessible option for institutional investors and even governments.

Bitcoin benefits from low confidence government bonds

The shift in interest toward Bitcoin can also be attributed to declining confidence in government bonds following increasing uncertainty in macroeconomic factors.

Government bonds are no longer acting as protective assets during market downturns on risk-off days, according to a research note by KKR & CO.

"During risk-off days, government bonds are no longer fulfilling their role as the 'shock-absorbers' in a traditional portfolio," wrote KKR's head of global macro and asset allocation, Henry McVey.

Japan's 30-year government bond yield climbed to a high of 3.15% on Tuesday, marking its highest rise in history. The 30-year US Treasury yield also surged briefly above the 5% psychological level following Moody's downgrading of the US. The higher yields indicate increased sell-offs among investors as government bond yields are negatively correlated with their prices.

KKR noted that the decline in bond effectiveness makes it difficult for stock investors to view treasuries as a safe haven. This results from a similar sell-off in stocks and bonds, instilling fear in investors.

"CIOs and their boards are seeing their offensive assets such as stocks and defensive assets such as government bonds both decline in value at the same time that their local currency liabilities, which they traditionally have not hedged, increase in value too," McVey added.

As a result, Bitcoin and Gold could benefit as alternative safe havens in such periods of simultaneous bond and stock collapse.

Bitcoin briefly surged above the $107,000 key level on Tuesday, just shy of its all-time high of $108,786, according to CoinGecko data. The top crypto is up about 33% from its low of $79,500 in March.