Bitcoin could behave more like US Treasuries: Bloomberg Intelligence

The latest crypto market research from Bloomberg Intelligence suggests that Bitcoin (BTC) may start behaving more like US Treasuries and gold, rather than stocks.

In its August “Crypto Outlook” report, authored by senior commodities strategist Mike McGlone and senior market structure analyst Jamie Coutts, the research unit compared Bitcoin markets to those of the gold, bonds and oil.

The authors suggested that macroeconomic influences such as the Federal Reserve’s monetary policies have resulted in similarities in the Treasury and Bitcoin markets:

“Tighter markets and falling global growth support the Federal Reserve’s shift to a ‘meeting-by-meeting’ bias in July, which could help pivot Bitcoin into a directional tilt closer to US Treasuries than actions.”

They also added that a “dump nature of commodities” and falling bond yields suggest an increase in the likelihood that bonds, gold and Bitcoin will be supported as inflation wanes.

Treasury bills, often referred to as T-Bonds, are long-term government debt securities issued by the US Treasury Department. They have a fixed rate of return and terms ranging from 20 to 30 years.

The report notes that crypto markets hit their biggest ever discount to 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 at the time of writing, after recovering the 200-week moving average, which sits at $22,827.

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

They signaled the $20,000 area as key support and they expect a base to build, similar to the $5,000 level in 2018-19.

Related: Bitcoin bulls target $25,000 price at Friday’s $510M options expiry

The researchers concluded that Bitcoin has been one of the best performing assets since its inception around a decade ago, adding:

“We think the same is coming, especially as it could evolve into global collateral, with outcomes more in line with Treasuries or gold.”

Coinbase research conducted in July indicates that the risk profile of the crypto asset class is similar to that of oil and tech stocks. According to Coinbase Chief Economist Cesare Fracassi, “the correlation between the prices of stocks and cryptoassets has increased significantly” since the 2020 pandemic.