• Standard Chartered analyst Geoff Kendrick forecasts Bitcoin reaching $135,000 soon and $200,000 by year-end
  • Bitcoin's positive correlation with Treasury term premiums could drive gains during prolonged U.S. government shutdown
  • The cryptocurrency currently trades at $120,456, just below its August peak of $124,480

Bitcoin is poised for a potential breakout to fresh record highs if political gridlock in Washington triggers an extended government shutdown, according to new analysis from Standard Chartered.

Geoff Kendrick, the bank's head of cryptocurrency research, told clients in a note Wednesday that Bitcoin's current trading level of $120,456 positions it for significant upside, with near-term targets of $135,000 and a year-end projection of $200,000. The cryptocurrency remains just 3.3% below its August peak of $124,480.

"We see Bitcoin's positive correlation with Treasury term premiums as a key driver in this environment," Kendrick wrote, noting that prolonged fiscal uncertainty could accelerate Bitcoin's ascent. The analysis suggests that traditional market stress indicators are increasingly influencing cryptocurrency valuations.

Standard Chartered's prediction comes as lawmakers face another funding deadline, with little progress made on appropriations bills. A person familiar with the matter said the bank's research team has been monitoring Bitcoin's reaction function to government funding gaps since the 2018 shutdown.

Trading desks reported increased institutional interest in Bitcoin derivatives following the report, with one trader at a European brokerage noting "unusual option flow" in calls targeting $130,000 through October. The trader, who asked not to be named discussing client activity, said the volume suggested sophisticated investors were positioning for a potential breakout.

Standard Chartered, which operates through Wealth & Retail Banking and Corporate & Investment Banking divisions across 54 markets, has been expanding its cryptocurrency research capabilities despite maintaining a cautious approach to direct trading. The bank's Financial Markets division provides sophisticated trading services across multiple asset classes, though it currently pursues no new activities under its Financial Holding Company status in the United States.

Kendrick's analysis points to Bitcoin's evolving role as a hedge against traditional market stress, particularly in emerging markets where Standard Chartered generates approximately 90% of its profits. The bank's extensive presence across Asia, Africa, and the Middle East provides unique insight into cryptocurrency adoption patterns.

While Bitcoin's volatility remains a concern for some institutional investors, the growing correlation with established financial indicators like Treasury term premiums is making the asset class more accessible to traditional portfolio managers. "The framework for analysis is becoming more sophisticated," Kendrick noted in his report.

Standard Chartered did not immediately respond to requests for additional comment on the timing of its projections or specific trade recommendations.

Correction: An earlier version of this article misstated Bitcoin's distance from its August peak. The cryptocurrency trades 3.3% below its record, not 2.8%.