Bitcoin May Be Behaving More Like US Treasuries: Bloomberg Intelligence

The latest crypto market research by Bloomberg Intelligence suggests that Bitcoin may start behaving more like United States (US) Treasuries and gold than stocks.

In its August Crypto Outlook report, written by senior commodity strategist Mike McGlone and senior market structure analyst Jamie Coots, the research unit compares Bitcoin markets to those of gold, bonds and oil.

The authors suggest that macroeconomic influences such as the Federal Reserve’s monetary policy have led to similarities in the government bond and bitcoin markets:

“Tightening markets and declining global growth support the Federal Reserve’s transition to a meeting-by-meeting bias in July, which could help steer Bitcoin into a bullish direction, more like US Treasuries than equities.”

They also added that the “post-pumping nature of commodities” and falling bond yields suggest that bonds, gold and bitcoin are more likely to be boosted as inflation eases.

Treasury bonds, often called T-bonds, are long-term government debt securities issued by the US Treasury. They have a fixed rate of return and maturity periods ranging from 20 to 30 years.

The report notes that crypto markets hit their biggest discount from the 100-week moving average in July. He added that it is “abnormal for Bitcoin to hold well below its 200-week moving average.” BTC is currently trading up 1.2% on the day at $23,1502 after just retracing its 200-week moving average at $22,827.

Analysts said the fact that BTC is 70% below its peak in early August, but still five times higher than its March 2020 low, “shows its potential.”

They noted the $20,000 area 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 conclude that Bitcoin has been one of the best-performing assets since its inception about a decade ago, adding:

“We think there is more of the same to come, especially as there may be a shift to global collateral, with outcomes more in line with government bonds or gold.”

A Coinbase study conducted in July found 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 cryptoassets has risen significantly” since the 2020 pandemic.