On April 6, Bloomberg released the April edition of its monthly “Crypto Outlook,” outlining the bullish stories about bitcoin and the fast-growing industry surrounding it. The report was remarkably optimistic, especially as it came from a renowned legacy firm in the financial and media industries. Here are some of the highlights:
“Bitcoin Fills The Need For Digital Reserve Assets In A Low Return World”
Adoption iterations for Bitcoin have entered a uniquely human state that we believe supports the rise of the cryptocurrency. Money managers reluctant to cross the Rubicon and allocate at least a small portion of the funds may be running risk, as Bitcoin simply does more of the same and rises in price amidst unprecedented low interest rates and high stocks. ”
The record low yields in the global economic environment have played a major role in Bitcoin adoption over the past year, and more investors are starting to notice this. Bloomberg also highlighted the dichotomy between bitcoin’s recent performance and gold’s performance.
“Indicators point to a rising ratio between bitcoin and gold”
“In addition to great maturation potential for burgeoning Bitcoin, crypto has a clear edge that should further squeeze its volatility over gold – Bitcoin’s supply is steady. General acceptance and higher prices are increasing, suppressing volatility and risk responses. ”
The report repeatedly highlighted bitcoin’s superior properties and its suitability as a monetary asset in the digital economy as opposed to gold. While the outlook for gold hasn’t been bearish for the metal itself, the data and price action has led Bloomberg to conclude that bitcoin is replacing its monetary predecessor as the preferred non-sovereign reserve in investor portfolios.
“Bitcoin Replacing Old-Guard Gold Is Faster Than Gradual”
“The adage that money flows to where it is best treated describes what we see as a solid foundation for the price of Bitcoin. It’s not necessarily bearish for gold, which is leaning on support tiers below $ 1,700 an ounce, but most indicators show a shifting global tide that is driving emerging digital currencies as a reserve. ”
“Digital Vs. Analog: Bitcoin’s Upper Hand”
Bitcoin’s relationship with gold is similar to 2016, when the metal peaked at just under $ 1,400 an ounce and the crypto launched towards its peak in 2017. A major difference this time around is that Bitcoin is in value. is rising and less speculative, supported by greater acceptance. It was the world’s largest carmaker by market capitalization (Tesla) that announced the diversification of some of its equity assets into crypto, allowing Bitcoin to break the USD 40,000 resistance. ”
The report also highlighted on-chain analyzes showing that bitcoin’s supply on exchanges continues to decline despite bullish price action, which is the opposite of the trend observed during the 2017 bull cycle.
“Few Signs of Bitcoin Holders Looking to Sell”
“Markets are about buyers versus sellers, and Bitcoin risk tends to rise further if the amount of crypto readily available to trade is a guideline. Our image shows the percentage of Bitcoin held on exchanges well below the 2020 peak, marking an extreme point of sale. The patterns in this Coinmetrics dataset suggest that the Bitcoin price will face an increased risk of sellers dominating buyers when the amount of the crypto on exchanges is higher than the previous high. That’s what happened around the price high in 2017. ”
Another notable highlight from the report was Bloomberg’s expectation that bitcoin was on the same path as the mining subsidy halving bull cycles of 2013 and 2017, indicating a price of $ 400,000 for the asset. Bitcoin’s logarithmic, seemingly programmatic price action over the years has made investors drool in today’s economic environment with no yield.
“Bitcoin rhymes with 2013, ’17 peaks around $ 400,000”
“The technical outlook for Bitcoin in 2021 remains strongly upward, as past patterns repeat. Common companions for strong annual rallies in the first-born crypto – low volatility and halves – are aligned favorably. Our image shows Bitcoin in similar territory to its approximately 55x gains in 2013 and 15x in 2017. To reach price extremes similar to those years in 2021, the cryptocurrency would approach $ 400,000 based on regression since its 2011 high. In September, the 180-day volatility on crypto roughly matched the low of October 2015. From that month’s average price, Bitcoin rose a little more than 50x to its peak in 2017. “