The latest cryptocurrency market research from Bloomberg Intelligence suggests that Bitcoin may start to behave more like United States (US) Treasury bonds and gold, than stocks.
In August’s Crypto Outlook reportwritten by Senior Commodity Strategist Mike McGlone and Senior Market Structure Analyst Jamie Coutts, the research unit compared Bitcoin markets to those of gold, bonds and oil.
The authors suggested that macroeconomic influences such as the Federal Reserve’s monetary policies have led to similarities in Treasury bond markets and Bitcoin:
“Tightening markets and a dip in global growth support the Federal Reserve’s shift to a “meeting-to-meeting” bias in July, which may help turn Bitcoin into a directional bias more akin to US Treasuries than with shares”.
They also added that the “commodity nature of the pump” and falling bond yields suggest an increase in the potential for bonds, gold and Bitcoin to rally as inflation eases.
Was the flush done? Boom, bust and #Bitcoin vs. #Gold, #Links, #Oil — Whether the recession has abated for most assets is the top binary issue for 2H, and in most scenarios, Bitcoin and Ethereum look poised to come out on top. Link to Pdf:https://t.co/iFSCZIULHe
— Mike McGlone (@mikemcglone11) August 3, 2022
Treasuries, often called T-Bonds, are long-term government securities issued by the US Treasury. They have a fixed rate of return and maturity periods ranging from 20 to 30 years.
The report noted that crypto markets experienced their biggest-ever decline from their 100-week moving average in July. He added that “it is unnatural for Bitcoin to hold well below the 200-week moving average.” BTC is currently trading up 1.2% on the day at $23.1502, having just retook its 200-week moving average, which sits at $22,827.
Analysts said the fact that BTC 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 that they expect a base to build, similar to the $5,000 level in 2018-19.
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The researchers concluded that Bitcoin has been one of the best-performing assets since its inception nearly a decade ago, adding:
“We believe more of the same is ahead, particularly as there may be a shift to global collateral, with outcomes more in line with Treasuries or gold.”
Coinbase research conducted in July shows 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 cryptocurrency prices has increased significantly” since the 2020 pandemic.