Bitcoin is on track for further downside, according to Standard Chartered's global head of digital assets research, Geoffrey Kendrick.
Kendrick expects bitcoin to fall further to the $69,000 to $76,500 range over the weekend or by Monday, he told The Block. "Now that is a dip I would like to buy," he added.
Bitcoin briefly dipped below $79,000 overnight and is currently trading around $81,400. The drop below $80,000 raises questions about whether the sell-off is nearing an end, Kendrick said, adding that he expects another large outflow from ETFs today, following Tuesday's over $1 billion redemption.
Since the U.S. election last November, net ETF purchases have declined by $2.5 billion at the $80,000 level, Kendrick noted.
ETF purchases since U.S. election now $2.5 billion in the red
Source: Standard Chartered
There has been debate over whether ETF outflows matter, with some arguing that redemptions are market-neutral because they reflect the closing of carry trades. These trades involve borrowing bitcoin at lower prices, holding it through ETFs, and selling later at a higher price, often with hedges in place. But Kendrick says these carry trades are not large enough to explain the ETF outflows.
Instead, he points to hedge funds increasing their short positions, which he believes signals that investors are actively betting against bitcoin. CFTC data shows that hedge fund short positions have increased from $7.9 billion to $11.3 billion since the U.S. election (as of Feb. 18), while ETF positioning increased from $23.5 billion to $40.2 billion before falling to $37 billion.
The latest CFTC data for Feb. 25 will be released today, which Kendrick said is worth watching.
ETF (net) cumulative position vs. CFTC hedge fund short position (USD billion)
Source: Standard Chartered
"Of course, CFTC data may just represent other short futures (on exchanges), so viewing these in percentage increase is probably fairer. ETF positions up 71% since Nov. 5, CFTC hedge fund shorts up 43%," Kendrick said.
He added that this suggests ETF investors remain largely long, making them vulnerable to panic selling if Bitcoin continues to decline. "To the degree these stem from underlying retail flow, I think they remain at risk of panic selling. Again, look for large outflows today," he said.
Looking ahead, Kendrick questions whether risk assets like bitcoin will rally or remain under pressure, now that Trump's recent tariff announcements have been factored into the market. He compares the current setup to August 2024, when Bitcoin fell from $70,000 to $50,000 in a week.
If the market follows a similar pattern, another 5.5% decline from current levels would place bitcoin in the $69,000 to $76,500 range — a level Kendrick says he would consider buying at.
Weekend price action for BTC (%)
Source: Standard Chartered
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