Bitcoin Faces Weekend Plunge: Standard Chartered Warns

Standard Chartered, a leading global bank, has issued a warning that Bitcoin (BTC) could potentially experience further declines over the weekend, similar to the market conditions observed in August 2024. The bank's head of digital asset research, Geoffrey Kendrick, attributed the downside risk to continued ETF outflows and mounting hedge fund short positions.

Kendrick expressed concerns over the recent market weakness and the absence of extended breaks enjoyed by other markets. He noted that Bitcoin's drop below $80,000, a key resistance level following Trump's election victory, raises questions about the extent of the sell-off. Kendrick's analysis pointed to significant ETF activity as a harbinger of further declines, with Bitcoin ETF outflows almost touching $1 billion on Feb. 25, a critical threshold.

Kendrick also highlighted a growing disconnect between ETF positioning and hedge fund short exposure based on CFTC data. Since the US election, ETF positions have surged from $23.5 billion to a peak of $40.2 billion, now down to $37.0 billion, while hedge fund shorts climbed from $7.9 billion to $11.3 billion as of Feb. 18. Kendrick noted that ETF positions are up 71% since Nov. 5, but hedge fund shorts are up only 43%, implying that there is still a majority of outright longs in the ETFs, which remain at risk of panic selling.

Kendrick revisited his earlier caution regarding downside risks, warning that Bitcoin's key convexity risk level of $90,000 had been breached. He had previously stated that while BTC trades relatively well within the digital asset complex, it is now caught up in the broader risk-off sentiment. Kendrick added that lower US Treasury yields might offer long-term support even as near-term sentiment remains bleak, but cautioned against buying the dip before a more decisive dip.

Looking ahead to the weekend, Kendrick expressed skepticism that risk assets would rally given looming geopolitical tensions and tariff implementations. He noted that another drop of similar magnitude to the one experienced in August 2024, when panic selling pushed Bitcoin below $50,000 after a rapid 5.5% decline, could see Bitcoin slide into the $69,00