Bitcoin's Hedge Role Under Threat From US Bond Market Stress
1min read Standard Chartered’s global head of crypto research, Geoffrey Kendrick, has expressed his belief that Bitcoin (BTC) has yet to fully account for the growing signs of systemic risk, despite its recent strengthening as a hedge. In an April 22 client note, Kendrick warned that political pressure on the US Federal Reserve is causing bond market stress, which could soon impact crypto markets.
Kendrick highlighted that the US 10-year term premium has reached its highest level in 12 years. This increase reflects growing concerns about inflation, debt issuance, and the potential replacement of Federal Reserve Chair Jerome Powell. Kendrick stated that the threat to the Fed’s independence due to Powell’s potential replacement falls into the category of government-related risks, and Bitcoin should begin to reflect this shift soon.
Kendrick categorized Bitcoin as a hedge against two types of systemic threats: private-sector collapses and public-sector credibility shocks. While Bitcoin often trades like a risk asset in normal conditions, its true function emerges during macro stress events. The latest term premium spike, an indicator of long-term inflation and rate risk, represents the kind of environment where Bitcoin historically reasserts its hedge narrative.
Kendrick noted a recent divergence: while the term premium has surged, Bitcoin’s price has stalled below the $100,000 mark. He attributed this lag to a temporary investor focus on trade-related fears, including tech-sector tariffs, which have muted Bitcoin’s reaction. Kendrick wrote that when the narrative rotates back to central bank credibility, Bitcoin will revert to its hedge function.
Despite short-term volatility, Kendrick reaffirmed Standard Chartered’s long-term price forecast for Bitcoin: $200,000 by the end of 2025, and $500,000 by 2028. He attributed this projected rise to macroeconomic pressure and improving structural access via spot ETFs, as well as a maturing derivatives market. Kendrick has previously modeled Bitcoin’s growing share in optimized gold-BTC portfolios as volatility falls, arguing that this supports higher BTC prices over time, particularly if institutional access continues to expand under the current administration.
Kendrick concluded that this could be what’s needed for the next all-time high for Bitcoin. The analysis underscores the potential for Bitcoin to serve as a hedge against systemic risks, particularly as macroeconomic pressures and political uncertainties continue to mount. The forecast for Bitcoin’s price trajectory remains optimistic, with a focus on long-term structural improvements and institutional adoption.
