On April 6, Bloomberg released the April issue of its monthly “Crypto Outlook,” outlining the bullish tales surrounding bitcoin and the burgeoning industry that surrounds it. The report was particularly bullish, especially as it came from a reputable legacy firm in the finance and media industry. Here are some of the highlights:
“Bitcoin fills the need for digital reserve assets in a low interest rate share”
“Adoption iterations for Bitcoin have entered a unique state of human nature that supports the rise of crypto, in our opinion. Money managers who are reluctant to cross Rubicon and allocate at least a small portion of the funds may be at risk, as Bitcoin simply does more of the same and rises in price amid unprecedented low interest rates and higher stocks. ”
The record low interest rates across the global economic environment have played an important role in the adoption of Bitcoin over the last year, and more investors are starting to notice it. Bloomberg also highlighted the dichotomy between the recent performance of bitcoin versus the performance of gold.
“Indicators point to rising Bitcoin-to-gold ratios”
“In addition to plenty of maturing potential for beginning Bitcoin, the crypto has a clear edge that should further push its volatility over gold – the Bitcoin supply is solid. Mainstream adoption and higher prices increase in depth, which suppresses volatility and risk measures. ”
The report repeatedly emphasized the superior characteristics of bitcoin and its fit as a monetary asset in the digital economy as opposed to gold. While the outlook for gold was not bearish for the metal itself, the data and pricing measure has led Bloomberg to conclude that bitcoin replaces its monetary predecessor as the preferred non-sovereign reserve asset in investor portfolios.
“Bitcoin replacing Old-Guard Gold is more sudden than gradual”
“The proverbs that money flows to the place where it is best processed describe what we see as a tightening surface for the price of Bitcoin. It is not necessarily bearish for gold, which supports layers of support below $ 1,700 an ounce, but most indicators show a shifting global tide that favors the burgeoning digital currency as a reserve asset. ”
“Digital vs. Analog: Bitcoins prevail ”
“Bitcoin’s ratio to gold is similar to 2016, when the metal peaked just under $ 1,400 an ounce and the crypto was launched towards its peak in 2017. An important difference this time is that Bitcoin is rising in value and less speculative, supported by greater adoption. It was the world’s largest carmaker by market coverage (Tesla) that announced the diversification of some of its share capital into the crypto that allowed Bitcoin to break $ 40,000 resistance. ”
The report also highlighted on-chain analysis showing that the supply of bitcoin on exchanges continues to decline despite bullish price action, which is the opposite of the trend observed in the 2017 bull cycle.
“Get signs of Bitcoin holders wanting to sell”
“Markets are about buyers versus sellers, and Bitcoin risks lean towards further price improvement if the amount of crypto that is readily available for trading is a guide. Our graphics depict the percentage of Bitcoin held on exchanges well below the peak from 2020, which marked an extreme sale. The patterns in this dataset from Coinmetrics suggest that the Bitcoin price will increase the risk of sellers dominating buyers when the amount of crypto held on exchanges exceeds the previously high. That is what happened around the high price in 2017. ”
Another notable highlight from the report was Bloomberg’s expectation that bitcoin was on a similar path as the 2013 and 2017 mining subsidy halved bull cycles, pointing to a price tag of $ 400,000 for the asset. The logarithmic, seemingly programmatic, price action of bitcoin over the years has spotted investors in the current no-yield economic environment.
“Bitcoin Rhyme With 2013, ’17 Peaks About $ 400,000”
“The technical outlook for Bitcoin in 2021 will remain sharply upward if previous patterns are repeated. Ordinary companions to strong annual collections in the first-born crypto – low volatility and halves – are adjusted positively. Our graph depicts Bitcoin for similar reasons as the roughly 55x gain in 2013 and 15x in 2017. To reach extreme prices similar to those of 2021, the crypto would approach $ 400,000, based on regression since the 2011 high. In September, 180-day volatility on the crypto matched the lowest level from October 2015. From the month’s average price, Bitcoin rose just over 50 times to the top in 2017. ”