Standard Chartered says Bitcoin’s pain is tied to equities, relief hinges on potential Fed pivot

Standard Chartered's Head of Digital Assets Research Geoff Kendrick believes Bitcoin's recent price action is closely aligned with broader risk asset distress rather than issues specific to the cryptocurrency itself.

"I would argue that Bitcoin has traded solidly within this ‘Magnificent Seven plus Bitcoin’ group, on a volatility-adjusted basis," Kendrick said in an email on Tuesday. "Tesla has traded the worst, and Meta and Apple the best. The rest are similar to Bitcoin, on a volatility-adjusted basis."

Kendrick added that the downturn in Bitcoin appears to be driven by broader market sentiment, not "locally Bitcoin-based pain." He suggested that recovery for Bitcoin will likely depend on two potential catalysts: a broader risk asset recovery or Bitcoin-specific positive news, such as sovereign buying from the U.S. or other nations.

Regarding risk assets, Kendrick noted tariff clarity or a swift move toward Federal Reserve rate cuts would be necessary to drive recovery. "A quick move to Fed rate cuts, with the May meeting moving towards a 75% likelihood of a cut rather than the current 50% possibility, could spark a rebound," he explained.

On the bearish side, Kendrick cautioned that if the downward trend continues, a break below the $76,500 level could quickly lead Bitcoin to test support around $69,000. However, he reaffirmed his long-term bullish outlook, predicting Bitcoin will reach $200,000 by the end of 2025.

"My $200,000 target remains undaunted by this near-term noise. In fact, all this noise increases the likelihood of Fed rate cuts, making me more emboldened in my long-term view," Kendrick stated.

Next week's Fed rate decision could test Bitcoin

According to an analyst, next week’s U.S. Federal Reserve interest rate decision could present a significant test for Bitcoin, as the digital asset may experience further declines if the U.S. central bank follows the consensus forecast of maintaining current rates, 

The Federal Open Market Committee (FOMC) will meet on Wednesday, March 19, and most interest rate traders predict the Fed will keep rates unchanged. According to CME Group’s FedWatch tool , there is a 97% probability that rates will remain steady at next Wednesday’s meeting.

CoinDCX Ventures Managing Director Rohit Jain told The Block that if rates do remain steady at next week's FOMC meeting, it could weigh on risk asset sentiment.

"This hesitation to cut rates could trigger further crypto downturns, with Bitcoin potentially testing support levels of about $70,000 in the coming days, with altcoins like Ethereum and Solana mirroring these declines," Jain said.

Fed under pressure to maintain current rate

Meanwhile, Federal Reserve Governor Adriana Kugler has signaled that the central bank should maintain its current stance on interest rates, citing concerns over persistent inflation.

"I’m actually quite concerned about some of the persistence in inflation that we have been seeing," Kugler said at the Conference on Monetary Policy Transmission and the Labor Market last Friday. She added that it "could be appropriate" for the Federal Reserve to hold interest rates steady "for some time."

The FOMC, which determines the Federal Funds Rate — a benchmark rate impacting loans and financial products — has already cut interest rates three times since September, reducing the rate by a combined full percentage point before pausing in January. The Fed’s overnight borrowing rate currently sits within a range of 4.25%-4.5%.

Trump tariffs exacerbate uncertainty

Market uncertainty has been exacerbated by President Trump’s tariff policies , including the recently announced 25% duties on imports from Mexico and Canada, set to take effect on March 20. Broader trade restrictions are also being threatened, which has contributed to heightened volatility in both stock and crypto markets.

Jain suggested that Trump’s tariff strategy could be a deliberate attempt to stir market volatility and pressure the Fed into cutting rates to reduce the U.S.'s debt refinancing burden.

"While a March cut seems improbable, futures markets suggest an almost 50% probability of a 25-basis-point reduction by the May 7, 2025, meeting, driven by growing economic concerns like slowing GDP growth, projected at 2.1% for Q1 2025, and rising unemployment, last reported at 4.2% in February," Jain said.

The probability of a rate cut by May has jumped by 12% over the past 24 hours, according to the CME’s FedWatch tool, indicating a 46% chance of a Fed rate cut by May and nearly a 90% likelihood of a cut by June.