As Bitcoin (BTC) continues to experience its recent stretch of red weekends, Standard Chartered has issued a warning that the cryptocurrency could potentially plummet to a range between $69,000 and $76,500 in the next two days. Geoffrey Kendrick, the head of digital asset research at the bank, attributes this downside risk to ongoing ETF outflows and an increasing number of hedge fund short positions.
Kendrick expressed concerns about the current fragility of the market, remarking on the lack of respite other markets usually enjoy. “It is at the end of weeks like this that digital asset participants wish the asset class closed for the weekend,” he stated. Kendrick also drew attention to Bitcoin’s fall below the $80,000 mark, once a crucial resistance level after Trump’s election victory, and questioned the potential extent of the sell-off.
The analyst identified significant ETF activity as a warning sign of further declines. He observed that Bitcoin ETF outflows nearly reached the critical threshold of $1 billion on February 25. Despite these substantial outflows, Kendrick suspects that the selling pressure may not have fully subsided yet.
In addition, Kendrick noted a growing disconnect between ETF positioning and hedge fund short exposure, as revealed by CFTC data. Since the US election, ETF positions have jumped from $23.5 billion to a high of $40.2 billion (now at $37.0 billion), while hedge fund shorts have increased from $7.9 billion to $11.3 billion as of February 18.
“ETF positions are up 71% since Nov. 5, but hedge fund shorts are up only 43%. This implies there is still a lot (the majority) of outright longs in the ETFs. To the degree these stem from underlying retail flow I think they remain at risk of panic selling,” Kendrick said.
Kendrick reiterated his earlier warnings about downside risks, noting that Bitcoin’s key convexity risk level of $90,000 had been breached. “While BTC trades relatively well within the digital asset complex, it is now caught up in the broader risk-off sentiment,” he said earlier in the week.
While lower US Treasury yields could potentially provide long-term support, Kendrick cautioned against buying the dip prematurely, given the current gloomy near-term sentiment. He also voiced doubts that risk assets would rally over the weekend, in light of looming geopolitical tensions and the implementation of tariffs.
Looking back at a similar period in August 2024 when panic selling caused Bitcoin to drop below $50,000 following a rapid 5.5% decline, Kendrick suggested that another fall of comparable magnitude could push Bitcoin into the $69,000 to $76,500 range.
