Bullish Bloomberg Crypto Outlook Reveals Strengthening Foundation for Crypto
Bloomberg recently released their June 2020 edition of the Bloomberg Crypto Outlook, an in-depth analysis of the current crypto market and the enormous potential that their analysts are seeing within the ecosystem.
Their report noted several bullish analyses for Bitcoin’s recent performance and impending market dominance. These items include:
- The acceleration of Bitcoin market maturity due to central bank easing.
Following recent central bank easing to stimulate the economy in the onslaught of the COVID-19 pandemic, Bitcoin is revealing a more mature foundation than ever before.
The sell-off of traditional assets in mid-March that sent markets into historical lows only temporarily affected Bitcoin. Bitcoin, after losing almost 50% of its value in one day, quickly rebounded back to its’ pre-COVID prices, making it evident to investors that Bitcoin’s value has set a firm foundation around $8,000 USD, Bloomberg reports.
Lastly, with the Fed planning on keeping interest rates low through 2022, investors are looking for higher returning investments, and Bitcoin is quickly becoming the next best answer, especially as Fidelity Digital Assets recently released a report stating that 80% of institutional investors see value in digital assets.
- A firming foundation indicating heightened maturity as Bitcoin records lowest volatility next to the stock market and commodities as several trends are mirroring 2016’s bull run.
Bloomberg also reported on Bitcoin’s trailing of its’ 2016 trends after its’ recent halving, especially as the last time Bitcoin halved was 2016. The report states:
“That was the last time supply was halved, and the third year after a significant peak. Our graphic depicts Bitcoin marking time for a third year following the parabolic 2017 rally. After 2014’s 60% decline, by the end of 2016 the crypto about matched the 2013 peak. Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”
With trends mirroring the 2016 bull run and 2017 all-time high, Sarson Funds agrees with Bloomberg’s prediction that Bitcoin will approach its’ all time high of 20,000 in 2020, and believe it is highly likely that Bitcoin will blow past its last all-time high as it continues to mature over the next year, with the COVID-19 pandemic amplifying the need for contactless payments.
While Bitcoin is on track to reach historic highs, Bloomberg is also reporting that Bitcoin is marking its lowest volatility against the stock and commodities markets. With the coronavirus accelerating maturity, Bitcoin’s 260-day volatility measure is currently the lowest ever versus the Nasdaq, as the ratio of the Bitcoin price to the Nasdaq is 1:1. Likewise, Bitcoin is also marking the lowest ever liquidity next to crude oil, which Bloomberg sees as a bullish indication that the crypto is truly heading towards equivalency to digital gold and will continue on an upward trend versus the commodity.
- Bitcoin becoming a digital gold as it follows Gold’s historical trends.
Extending on Bitcoin’s emergence as a digital Gold, Bloomberg has deemed gold and crypto as their top assets to advance in 2020, with COVID-19 acting as the fuel they needed to solidify their utility as store-of-value assets and crypto’s emergence as a digital dollar. Fueled by the continuance of central bank easing through 2022, Bloomberg predicts that Bitcoin will continue to appreciate and strengthen its’ recognition as digital gold among investors.
- The Grayscale Bitcoin Trust, a leading Bitcoin on-exchange platform, consumes about 25% of newly-mined Bitcoins, compared to 10% in 2019, representing significantly higher institutional interest in crypto exchange-traded instruments.
The Institutional adoption of Bitcoin is also fueling the asset’s firming foundation and impending bull run. The Grayscale Bitcoin Trust (GBTC), a leading Bitcoin on-exchange platform, currently takes a quarter of newly-mined Bitcoin off of the market for its own institutional operations and investments, marking an increase of 2.5x from 2019’s consumption.
Bloomberg also reported that GBTC’s current 30-day average AUM in Bitcoin equivalents is near $340,000, which is 2% of total bitcoin supply. From 1% of total supply in 2018, this doubling of the average AUM indicates a massive increase and growth in institutional investment in cryptocurrencies.
- Increasing interest in Bitcoin Futures are significantly swaying investors to considering Bitcoin as a mainstream asset.
Bitcoin’s rapid growth over the past two years also has to do with the increased adoption and mainstreaming of Bitcoin futures. Bloomberg states in their report that “Favorable trends in Bitcoin futures trading on the CME are supportive of the price… Representing maturation toward the mainstream of assets, increasing futures open interest and the steady price premium are headwinds for volatility and tailwinds for prices.”
Bitcoin also recorded a near doubling in futures open interest since the level when the asset topped $10,000 in 2019, indicating a tilt toward higher prices in the near future, according to Bloomberg. While the 50,000 BTC within futures markets is minimal next to the total supply, the availability of Bitcoin futures and their recent growth is essential in Bitcoin’s path to becoming a mainstream asset class for all investors, Bloomberg reported.
- Highest active level of Bitcoin addresses points to price stability around $10,000.
Bloomberg also noted that the recent two-year high of active Bitcoin addresses indicates support for Bitcoin’s price above $10,000. As hash rates and transactions continue to increase, Bitcoin has set a firm foundation around $8,000 with support for the price estimated above $10,000. With this being said, recent trends are significantly supporting price appreciation.
- Increasing capitalization of stablecoins indicates trends towards the digitization of currencies and stablecoin market dominance.
Lastly, the rapid increase of investor utilization of stablecoins as hedges for risk against the volatility of the crypto market is provocative for the Bitcoin price. Utilized as risk-hedging and value-transfer assets, investors are utilizing stablecoins pinned to the U.S. dollar or other fiat currencies to maintain the value of their assets without the need for a middleman. Tether is currently the most widely-trusted stablecoin, as its market cap just passed that of Ripple XRP and is on track to pass Ethereum, according to Bloomberg’s market tracker.
Be cognizant of the importance of stablecoins like Tether as they become dominant in the crypto universe. Stablecoins are becoming the most appealing approach for central banks across the world to adopt crypto.
With the Bloomberg’s market analysis being incredibly bullish for Bitcoin’s future, Sarson Funds encourages everyone to educate themselves on cryptocurrencies and blockchain technology. We believe that cryptocurrency and blockchain technology are the future of finance and international business operations, and we are dedicated to continue to spreading the word, educating, and advocating for greater regulation in preparation for impeding universal adoption.
By Liam McDonald