Anti-gold sentiment: Bloomberg analyst explains Bitcoin’s rise to $50,000
The recent plunge in bitcoin’s price from its record high of $42,000 has done little to shake its bullish bias, at least according to a renowned Bloomberg analyst.
In a report on Wednesday, “senior commodity strategist” Mike McGlone writes that the flagship cryptocurrency could hit $50,000 in the coming sessions.
He praises Bitcoin for its ability hold the $30,000 to $40,000 range during its Financial Peak recent pullback move, commenting that $30,000 in particular serves as a solid support base to attract institutional investors.
“Around $30,000 is the threshold supported by a rising tide of institutional investors and global adoption as a store of value,” McGlone said. “Our chart shows the milestone of the 20-week moving average above $20,000, which we see as an extreme downside level in the event of a risk-off slowdown similar to Q1.”
Goodbye, gold
As to why institutional investors are buying bitcoin, McGlone highlights “abundant evidence” that funds are flowing from gold to crypto markets.
Unusually low interest rates, rising debt-to-GDP ratios and global quantitative easing provided strong tailwinds for the bitcoin price. With its limited supply cap of only 21 million tokens, the cryptocurrency saw a dramatic increase in its demand as a safe-haven asset.
Bitcoin surged as much as 988 percent from its mid-March low of $3,858. Source: BTCUSD on TradingView.com
Meanwhile, traditional investors chose gold, whose value also hit a record high in 2020 against inflation fears.
McGlone writes that institutional investors have begun to take exposure to the bitcoin market through the Grayscale Bitcoin Trust. The New York-based fund allows investors to gain exposure to bitcoin while avoiding the challenges of direct purchase, storage and custody.
Capital flowed into Grayscale Trust as it accumulated more and more Bitcoin to support its security offerings. Meanwhile, gold ETFs saw withdrawals.
“Our [research] shows accelerated flows into the Grayscale Bitcoin Trust (GBTC), while declining across gold’s known ETF holdings,” McGlone said. “At nearly 700,000 bitcoins, GBTC is at a record high, while gold ETFs have fallen from the October peak to about 107 million ounces, just over 111 million.”
Another zero for bitcoin valuation
Institutional acceptance of bitcoin will tend to continue to rise as volatility falls to levels seen in other traditional markets such as gold and equities. McGlone explains that the cryptocurrency’s volatility could even fall below that of the precious metal, making it a more attractive safe-haven asset by 2025.
“Bitcoin’s 260-day volatility [is] in the early days of bottoming out from an all-time low against the same gold measure, similar to early 2017,” he adds, writing that the cryptocurrency could add another zero against gold