The latest study on the cryptocurrency market from Bloomberg Intelligence suggests that bitcoin (BTC) could start behaving more like US Treasuries and gold, rather than stocks.
In their August “Crypto Outlook” report, authored by senior commodity strategist Mike McGlone and senior market structure analyst Jamie Coutts, the research unit compared the markets for bitcoin with those for gold, bonds and oil.
The authors suggested that Macroeconomic influences, such as the Federal Reserve’s monetary policies, have led to similarities in the Bitcoin and Treasury bond markets:
“Tightening markets and slumping global growth support the Fed’s shift to a “meeting-by-meeting” bias in July, which may help bitcoin lean in a more bond-like direction of the U.S. Treasury than that of stocks.”
They also added that the “nature of commodities following dumping” and the retreat in bond yields suggest an increased likelihood that bonds, gold and bitcoin will be boosted as inflation subsides.
Is the Flush Done? Booms, Busts and #bitcoin vs. #Gold, #bonds, #Oil — Whether the ebbing tide has subsided for most assets is the top binary issue for 2H, and in most scenarios, Bitcoin and Ethereum appear poised to come out ahead. Link to Pdf:https://t.co/iFSCZIULHe
— Mike McGlone (@mikemcglone11) August 3, 2022
Has the fall ended? Boom, bust and Bitcoin vs. Gold, bonds, and oil. The main binary question for the second half of the year is whether the ebb tide has subsided for most assets, and in most scenarios, bitcoin and Ether look poised to come out on top. Link to the PDF:
Treasury bonds, often called T-Bonds, are long-term government debt securities issued by the United States Department of the Treasury.. They have a fixed interest rate and their maturity terms range from 20 to 30 years.
The report notes that cryptocurrency markets hit their biggest ever discount to the 100-week moving average in July. He added that it is “abnormal for bitcoin to remain well below its 200-week moving average.” BTC is currently trading down 1.2% on the day at $23,150 at the time of writing, after recovering from the 200-week moving average, which sits at $22,827.
Analysts said that the fact that the BTC price was 70% below its peak in early August, but still five times higher than its March 2020 low, “shows its potential.”
They pointed to the $20,000 zone as key support and expect a base to be building, similar to the $5,000 level in 2018-19.
The researchers concluded that bitcoin had been one of the best-performing assets since its inception roughly a decade ago.and added:
“We think more of the same is coming, especially as it may be transitioning to a global guarantee, with outcomes more aligned with Treasuries or gold.”
A Coinbase study conducted in July indicates that the risk profile of the crypto asset class is similar to that of oil and technology stocks. According to Coinbase Chief Economist Cesare Fracassi, “the correlation between stock prices and crypto assets has increased significantly” since the 2020 pandemic.
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