On April 6, Bloomberg unveiled the April issue of its monthly “Crypto Outlook” outlining the bullish narratives surrounding bitcoin and the emerging industry around it. The report was particularly clumsy, especially since it came from a reputable heritage firm in the financial and media industry. Here are some highlights:
“Bitcoin fills the need for digital reserve assets in a low-yield world”
‘Adoption iterations for Bitcoin have, in our view, entered a unique state of human nature that supports the rise of crypto. Money managers who are reluctant to cross the Rubicon and allocate at least a small portion of the funds may be at risk because Bitcoin is simply doing more of the same and the price is progressing amid unprecedentedly low interest rates and rising stocks. ”
The record low returns in the global economic environment have played a major role in the adoption of Bitcoin in recent years, and more investors are starting to take notice. Bloomberg also highlighted the divide between the recent performance of bitcoin versus the performance of gold.
“Indicators point to rising Bitcoin-to-gold ratio”
‘Apart from a lot of maturity potential for emerging Bitcoin, the crypto has a clear edge that will further suppress its volatility against gold – the supply of Bitcoin is solid. General adoption and higher prices are increasing, which suppresses volatility and risk measures. ”
The report repeatedly emphasizes the superior characteristics of bitcoin and its fit as a monetary asset in the digital economy, as opposed to gold. Although the outlook for gold was not bleak for the metal itself, the data and price action 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 adage that money flows to the place where it is best treated describes what we see as a strengthening base for the price of Bitcoin. It’s not necessarily clumsy for gold, which supports low support at less than $ 1,700 per ounce, but most indicators show a shifting global tide favoring the emerging digital currency as a reserve asset. ”
“Digital vs. Analog: Bitcoin’s dominance “
‘The ratio of Bitcoin to gold is similar to 2016, when the metal peaked at just under $ 1,400 per ounce, and the crypto started at the 2017 high. A major difference this time around is that Bitcoin is rising in value and less speculative, supported by greater adoption. It was the largest automaker in the world (Tesla) that announced the diversification of some of its shares in the crypto, which could surpass Bitcoin’s resistance of $ 40,000. ‘
The report also highlighted analysis on the chain showing that the supply of bitcoin on exchanges is still declining, despite the rising price action, which is the opposite of the trend observed during the 2017 bull cycle.
“Few signs of Bitcoin holders wanting to sell”
‘Markets trade over buyers versus sellers, and Bitcoin risks lean towards further price appreciation, if the amount of crypto that is readily available to trade is a guideline. Our graph depicts the percentage of Bitcoin held on stock exchanges, well below the peak from 2020, which was an extreme sale. The patterns in this data set from Coinmetrics suggest that the Bitcoin price will have an increased risk that sellers will dominate buyers when the amount of the crypto held in exchange exceeds the previous high. This is what happened around the price in 2017. ”
Another notable highlight from the report was Bloomberg’s expectation that bitcoin was on a similar path to the 2013 and 2017 mining subsidy, halving bull cycles, indicating a $ 400,000 price for the asset. The logarithmic, seemingly programmatic, price action of bitcoin over the years has left investors in the current economic return without returns.
“Bitcoin rhyme with 2013, ’17 reaches about $ 400,000”
‘The technical outlook for Bitcoin in 2021 remains strongly upward as previous patterns repeat. General companions for strong annual gatherings in the first-born crypto – low volatility and halves – are favorably in line. Our graph depicts Bitcoin in similar territory as the approximately 55x profit in 2013 and 15x in 2017. To reach price extremes similar to those years in 2021, the crypto would approach $ 400,000, based on the regression since the 2011 high. In September, the 180-day volatility on the crypto was equal to the everyday low from October 2015. From that month’s average price, Bitcoin rose a little more than 50x to its high in 2017. ‘