Zinger Key Points
- Kendrick believes the market will need to see nominal yields roll lower as a result of growth fears before digital assets can recover.
- He suggests that patience is key for now, given the potential for market volatility in the next few days as BTC risks reaching $90,000.
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Standard Chartered‘s Head of Digital Assets Research Geoffrey Kendrick on Monday advised against buying the dip in cryptocurrencies until outright back-end U.S. Treasury yields come lower.
What Happened: In a note to Benzinga, Kendrick stated that the current sell-off differs significantly from the previous one.
While last week’s decline, driven by developments around China’s DeepSeek, was a buying opportunity, today’s market downturn stems from newly imposed U.S. tariffs on Canada and Mexico, fueling inflation concerns and dragging down risk assets.
Kendrick explained that the tariffs are having a “outright negative” effect on digital asset prices by increasing U.S. inflation expectations.
He highlighted a 10 basis point increase in 2-year inflation expectations since Friday, further compounding the pressure on risk assets.
“The bigger/next question for me is whether and/or when growth fears outweigh inflation fears,” he said, explaining that the market needs to see nominal yields at the longer end of the U.S. Treasury curve come down, which would signal growth concerns are taking precedence over inflation.
Also Read: EXCLUSIVE: Anthony Scaramucci Warns Donald Trump’s Crypto Promises May Be A ‘Mirage’
Why It Matters: Major cryptocurrencies have experienced dramatic price drops early Monday morning.
Within the last 24 hours, top tokens have slumped by over 25%, with Bitcoin BTC/USD down approximately 7% and Ether ETH/USD plummeting by 20% in morning trade.
Other major tokens including Ripple‘s XRP/USD, Dogecoin DOGE/USD and Cardano's ADA/USD have fallen by more than 25% reversing all the gains since December.
This sharp downturn has wiped out gains made since the start of December, reaching levels not seen since early November before the U.S. election. In fact, many major tokens have fallen between 40 and 50% in the past month alone.
The rapid decrease in price triggered significant liquidations, with total liquidations across exchanges exceeding $2.2 billion, the highest so far this year and among the most substantial in the past year.
A single liquidation order on Binance, involving a $25 million Tether USDT/USD-margined ETH trade, suggests the severity of the market downturn.
Kendrick suggests that while digital assets will eventually benefit from lower real yields and higher inflation expectations in the US treasury market, it will take lower outright nominal yields to solidify that.
He advised that investors should wait until there are explicit signs of growth fears dominating inflation concerns.
Until then, he believes that the market may be in for a “choppy few days where the $90,000 level in BTC is again at risk."
Kendrick warns that the current market conditions are not conducive to immediately buying the dip, given the potential for further volatility until there is evidence that growth fears are outpacing inflation fears.
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