Geoffrey Kendrick, in a panel at the European Blockchain Convention. Source: EBC.
Geoffrey Kendrick is the Global Head of Digital Assets Research at Standard Chartered. Kendrick met FXStreet during the European Blockchain Convention held in Barcelona on October 16-17, a few days after a record crypto crash wiped out over $19 billion in leveraged positions. While the episode flags the market’s volatile nature, Kendrick says that the long-term drivers remain favorable and thus higher prices for the major crypto assets can be expected.
The correction seen on October 10th was unfortunate. A couple of weeks are needed for markets to digest an almost $20 billion wipeout. It is possible that we see some second-round effects from that liquidation.
It makes sense that the market consolidates for a week or two. I would say the flash crash lows from October 10th will be the low for now, but again, we may just need some of that consolidation time to see if there are any second-round effects or not.
Looking at the bigger picture, the structural story is still massively positive: ETF inflows continue and the US Federal Reserve (Fed) is cutting rates. The fact that the US government is in shutdown is also constructive for Bitcoin (BTC) in particular, because that's one of the reasons you want to have an asset that gives you exposure with no central authority.
It is likely we will get more noise over the Fed’s independence, which is massively positive for Bitcoin for the next three years.
My medium-term target of $500,000 for Bitcoin by the end of 2028 is still 100% achievable. I've got $200,000 by the end of the year: it seems a long way off now, but it’s still feasible.
Ethereum’s (ETH) structural story continues to improve. As the banking industry moves toward the crypto industry, as it builds on the blockchain space, the choice is going to be Ethereum because it has been there for around 10 years and it has never been down. While it is more costly than some of its competitors, it's the most trustworthy [network] in this space. If Tradfi trusts the Ethereum blockchain, they trust the foundation.
ETH is the next big story. I think ETH will continue to outperform Bitcoin, like it started to do in the past few months, amid the narrative of tokenizing real-world assets. I have a target of $7,500 for the end of the year. Again, it looks way up from now, but I think we can go well in that direction.
I think so. My only marginal concern is that this could have created a blow-up risk that we haven't seen yet. After a $20 billion liquidation, there's a chance that there is a crypto native fund that was hit. That's why I think markets need a couple of weeks to digest what happened and to conclude that this was a Trump-created blip (if nothing breaks).
Absolutely, especially for Bitcoin. The underperformance by Bitcoin this year compared to Gold and Silver has been somewhat surprising. It probably has to do with the type of buyer: in Gold and in Silver, it's been mostly out of Asia, sovereign-style money.
I think over time, the same logic of the debasement trade applies to Bitcoin. And I suspect where Gold has gone, Bitcoin will follow.
When you get sharp downturns in equities, digital assets tend to follow. So you have the medium-term hedge variable, particularly for Bitcoin. But when you get sharp downturns, unfortunately, digital assets – which are a technology solution based on blockchain – are highly correlated to that.
While Bitcoin is a good hedge for TradFi and government issues, Gold is a better hedge for geopolitical and trade woes.
Kendrick, speaking in a panel during the European Blockchain Convention. Source: EBC.
I think institutional adoption will continue, but it will take time. Organizations in the US, like pension funds, are super long-term and they take a while to get on board with new asset classes.
ETF flows, which is the number one version of institutional adoption, are just getting started. I have no doubt that these will continue to grow. With time, institutions will be major players in the digital asset class, and the market will become similar to what you see in other asset classes.
There are two sides to this. The growing role of institutions will mean less volatility in the asset class, at least in the majors. Institutions are mostly focused on BTC, ETH, and a few others, such as Solana (SOL).
However, institutions are not really going down to coin number 30+. So retail still will probably dominate that space for a number of years.
Still, regarding the majors, if the institutional bus is only just arriving and it has a big pile of cash, then those retailers that have positioned themselves relatively early can still take advantage of that.
Overall, small coins remain volatile, big coins get pushed higher, and all boats probably rise as a result of that.
For Bitcoin, I like to compare it to Gold. For Ethereum and other smart contract layer 1, the most useful metric is the revenue or fees paid to the applications built on the network. You can add those up and compare them across chains, and they give you a measure which is sort of the equivalent to P/E ratios for stocks.
When looking at different protocols, you can think about what they're good at. If you think that decentralized exchange trading might increase, there may be Uniswap (UNI). If you're thinking of leverage and borrowing, lending on the back of stablecoins and other real-world assets going into Defi, then think of Aave (AAVE).
The DATs have a place in the market. The original logic for MicroStrategy was that investor access was very restrictive when he started buying Bitcoin because it was years ahead of the ETFs.
This is still applicable in several countries, where it's still impossible to get direct access to Bitcoin and, as an average investor, you can buy MicroStrategy stock.
There are many smaller players now accumulating Bitcoin as well, and it makes sense that we see some consolidation of those going forward.
About other tokens, like ETH, we are really just getting started, and I think it’s quite exciting. The pace of buying is so dramatic and unlike anything we've ever seen in Bitcoin (even by MicroStrategy), and this obviously had an impact on the token price this year. That's something I expect will continue.
It is difficult to see how it would cause a problem for the underlying asset. For MicroStrategy, the breakeven is about $73,000. If the market goes well below that level, then we would probably get bigger problems.
The real-world asset tokenization sector looks set to outperform next year. Looking at the protocols, the most logical winner there is Aave. I think they have a fabulous product already and could become very powerful. To simplify, if the ETH price doubles, AAVE’s probably triple.
I also think Worldcoin (WLD) is interesting. Their proof of human concept could be a useful part of the ZK proof of individuals that is coming, and perhaps WLD can get some of that cake.