Now would be a good time to buy Bitcoin. This is what Mike McGlone hints hat, a senior commodity strategist at Bloomberg, who believes the flagship cryptocurrency is undervalued and trading for less than what it should be.
In a new edition of Bloomberg’s Crypto Outlook, McGlone looks ahead to a new bull run which will correlate with the broader economy. He said:
“Our graphic shows Bitcoin consolidating at the steepest-ever discount to its 100-week moving average. What’s notable is that the benchmark crypto last built a similar foundation in 2018-19 at about $5,000, and in 2015 closer to $300. That the price is about $20,000 on Sept. 2 supports our base case: Bitcoin is at a discount within an elongated bull market.”
The Bloomberg strategist explained that it is inevitable that the U.S. Federal Reserve will have to adapt from its current monetary policy of quantitative tightening. Since Bitcoin is underperforming, it is poised to become a primary beneficiary of this change:
“It’s typically a matter of time for the fed funds gauge to flip toward cuts, and when it does, Bitcoin is poised to be a primary beneficiary, along with Treasury bonds and gold. Ethereum may have a higher correlation with stocks, but the revolutionary technology is gaining traction.”
McGlone added:
“Bitcoin’s lockstep correlation with US liquidity conditions since the pandemic highlights the asset’s symbiosis with financial markets.”
Referring to the basics of economics, a decrease in supply and less volatility of the asset, the report says that it is inevitable for Bitcoin to continue on another bull run:
“Risk vs. reward may be tilting toward the resumption of leading bull markets of about the past 40 and 10 years: US Treasury bonds and Bitcoin. A key takeaway from our graphic is Bitcoin’s maturation process, on top of the extreme crypto and bond-futures discounts reached in 1H vs. 100-week moving averages. The crypto’s volatility is declining with increasing adoption and participation. This is happening as supply is declining, which by the rules of economics means rising prices over time. Bitcoin is up about 5x to Sept. 2 from a similar discount in 2018.”
At the time of writing, Bitcoin is moving hands at $19,364 according to CoinMarketCap data.
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Source: Igaming
