Bitcoin’s recent sharp pullback from its all-time high just below $100,000 has sparked widespread discussion among traders and analysts. Despite the volatility, **Standard Chartered**’s senior digital asset strategist, **Geoffrey Kendrick**, maintains a bullish long-term outlook, projecting a year-end target of **$125,000—with a potential dip down to $88,700** along the way.
This correction is not viewed as a sign of weakness but rather a natural response to shifting macroeconomic conditions and technical market dynamics. Let’s explore the key drivers behind this pullback and why the broader bullish thesis for Bitcoin remains intact.
What’s Driving the Bitcoin Correction?
According to Kendrick, two primary factors are behind Bitcoin’s recent retreat: a decline in U.S. Treasury term premium and looming options expirations.
Falling Treasury Term Premium Weakens Bitcoin’s Hedge Appeal
One of the most significant macroeconomic triggers for the downturn is the sharp reduction in the U.S. Treasury term premium—a measure of the extra yield investors demand for holding long-term bonds over a series of short-term ones.
Following the announcement of President-elect Donald Trump’s Treasury Secretary pick, market expectations shifted toward stronger economic growth and fiscal reordering. This led to a compression in term premiums, which historically reduces demand for alternative stores of value like Bitcoin.
“Bitcoin thrives on uncertainty in traditional finance. When Treasury term premiums drop, that hedge utility temporarily diminishes,” Kendrick explained.
Bitcoin has increasingly been positioned as a hedge against macroeconomic instability, inflation, and currency devaluation. With reduced financial uncertainty—reflected in lower term premiums—its appeal as a safe-haven asset wanes temporarily.
Data from the New York Fed supports this correlation, showing a clear link between movements in Treasury term premiums and Bitcoin price trends over recent months.
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Options Expiry Adds Downward Pressure
Another contributing factor is the large volume of Bitcoin options set to expire monthly on Deribit. This week alone, over 18,000 BTC in open interest is concentrated around strike prices between $85,000 and $100,000.
Options expirations often create what traders call a "magnet effect," where spot prices are drawn toward these key levels due to hedging and positioning activities by market makers.
With so much notional value at play, volatility is expected to remain elevated through expiry. This can amplify selling pressure, especially if spot prices drift below major strike points.
Kendrick suggests that this confluence of macro and technical forces may push Bitcoin down toward $88,700, which coincides with the average purchase price of institutional buyers like ETFs and MicroStrategy since the U.S. elections.
Institutional Demand Holds Strong
Despite short-term price fluctuations, institutional adoption continues at a robust pace.
Since the November 2024 U.S. elections:
- Spot Bitcoin ETFs have seen net inflows of approximately 77,000 BTC
- MicroStrategy has acquired an additional 134,000 BTC, reinforcing its long-term confidence in the asset
This sustained buying suggests that institutions view any dip below $90,000 as a strategic accumulation opportunity.
However, Kendrick cautions that this average entry point—around $88,700—could act as a temporary resistance level until broader market sentiment shifts back in favor of risk assets.
“It’s not a hard ceiling,” he notes, “but it may cap rallies in the near term until fresh catalysts emerge.”
Broader Market Impact
Bitcoin’s correction hasn’t occurred in isolation. The entire crypto market felt the ripple effects:
- Total market capitalization dropped from $3.5 trillion to $3.35 trillion
- Over $500 million in leveraged futures positions were liquidated, signaling heightened risk aversion
- Altcoins broadly followed BTC’s downward trend, though major assets like Ethereum showed relative resilience
These figures underscore Bitcoin’s role as a market leader—its movements continue to set the tone for digital asset performance across the board.
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Why the $125,000 Target Still Stands
Even with near-term headwinds, Kendrick remains confident in his $125,000 year-end forecast** and an even more ambitious **$200,000 projection for 2025.
He frames the current pullback as a healthy correction within an ongoing structural bull market—one driven by:
- Institutional adoption
- Regulatory clarity (especially post-ETF approvals)
- Macroeconomic tailwinds, including potential rate cuts and dollar weakness
- Supply constraints, with Bitcoin’s next halving already priced into long-term models
“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.”
Key Support Levels to Watch
Traders should monitor several critical price zones:
- $88,700: Average institutional buy-in price; potential short-term resistance
- $85,000: Strong psychological and technical support
- A break below $85,000 could trigger further selling, but such a move would likely be short-lived given strong underlying demand
Historically, similar pullbacks—such as those seen after previous ATH breaks—were followed by strong recoveries once accumulation completed.
FAQ: Understanding Bitcoin’s Current Market Phase
Q: Why is Bitcoin dropping if fundamentals are strong?
A: Short-term price movements are often driven by technical factors (like options expiry) and macro shifts (like falling term premiums), even when long-term fundamentals remain solid. This kind of pullback allows for healthier consolidation before the next leg up.
Q: Is $88,700 a strong support level?
A: Yes—it represents the average entry point for major institutional buyers since the election. While it may act as resistance in the near term, it also serves as a strong floor due to accumulated demand at that level.
Q: Could Bitcoin still reach $125,000 by year-end?
A: According to Standard Chartered’s analysis, yes. The current correction is seen as temporary. With strong ETF inflows and macro tailwinds expected in late 2025, the path to $125,000 remains viable.
Q: What happens after options expiry?
A: Volatility typically decreases post-expiry as hedging pressures ease. This often creates conditions for clearer directional movement—either recovery or deeper correction—depending on prevailing sentiment.
Q: How does Treasury term premium affect Bitcoin?
A: Lower term premiums signal reduced fear in traditional markets, weakening Bitcoin’s appeal as a hedge. Conversely, rising premiums tend to boost BTC demand as investors seek alternative stores of value.
Q: Should I buy during this dip?
A: Many institutional players are doing exactly that. With ETFs and corporations continuing to accumulate, this phase may represent a strategic entry point for long-term holders.
Final Outlook: Correction ≠ Collapse
The current Bitcoin correction should not be mistaken for a reversal of trend. Instead, it reflects maturing market dynamics where macro indicators and derivatives activity play increasingly influential roles.
While price action may test key support levels near $85,000–$88,700, the underlying demand from institutions and growing recognition of Bitcoin as a macro hedge suggest that any decline is likely temporary.
With Standard Chartered maintaining its $125,000 year-end target** and forecasting **$200,000 by 2025, investors are reminded that volatility is part of the journey in a structural bull market.
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As always, market participants should focus on long-term trends over short-term noise—and recognize that every major rally in Bitcoin’s history has been preceded by periods of doubt and consolidation.
Now may be one of those pivotal moments.
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