Last Updated: 5 August 2022
Bitcoin may start to behave like US government bonds and gold. This is the conclusion of analysts at Bloomberg Intelligence in a new Crypto Outlook report. Currently, there is still a fairly high correlation (>50%) with equities.
The analysts are well-known commodities expert Mike McGlone and senior market analyst Jamie Coutts, who compare the bitcoin market with the markets for gold, bonds, and oil. According to them, macroeconomic influences, such as the Federal Reserve’s monetary policy, have similar effects on these assets.
A tighter market and a shrinking economy could tip the bitcoin market towards one more similarity to US government bonds than equities.
Assets that on paper are less correlated to the real economy could benefit as inflation eases and central banks’ money printers start to roar again.
Is the Flush Done? Booms, Busts and #Bitcoin vs. #Gold, #Bonds, #Oil — Whether the ebbing tide has subsided for most assets is the top binary issue for 2H, and in most scenarios, Bitcoin and Ethereum appear poised to come out ahead. Link to Pdf:https://t.co/iFSCZIULHe
— Mike McGlone (@mikemcglone11) August 3, 2022
US government bonds are also called T-bills, long-term government bonds issued by the US Treasury. They have a fixed yield, and the maturities vary from 20 to 30 years. The report went on to say that crypto-currencies reached the biggest discount ever compared to the 100-week moving average in July.
‘It is abnormal that bitcoin remains well below the 200-week moving average.’
Bitcoin is trading below $23,000 at the time of writing, having just recaptured the 200-week moving average. In August, the price was 70% below the former record set in November 2021. The analysts see the $20,000 zone as a key support level, similar to the $5,000 level during the descending bear market from mid-2018.
They added that bitcoin is still the best-performing asset ever. ‘We think more of the same is in store, especially once bitcoin takes on the function of a global hedge, after which its returns become comparable to gold or bonds. So fewer peaks and troughs in the future, with predictable returns, say the researchers.