Bitcoin is becoming a self-contained risk asset

In the latest Bloomberg Intelligence report, Bitcoin ( BTC ) is breaking away from risk assets. Historical patterns, coupled with increasing HODL behavior, suggest a slight slowdown.


The latest report of May’s Bloomberg Intelligence looks at the adoption of Bitcoin and other cryptocurrencies . In addition, it summarizes the markets and the unprecedented advances in monetary technology.

The report stated that the key conclusion of the Bloomberg intelligence team from the Bitcoin 2022 conference in Miami was that “what is happening to move money and finance forward in the 21st century is unstoppable” .

Bitcoin shows divergence against other risky assets

Earlier in the report, Bloomberg Intelligence notes that Bitcoin ‘s institutional participation and declining volatility versus traditional risk assets appear to show a clear divergence in favor of the cryptocurrency . This allows investors to separate themselves from the common problems of traditional assets.

The analysis team behind the report states that “the opinion is not to break the mantra ‘the trend is your friend'”. Rather, they explain that investors who choose not to allocate at least partially to Bitcoin can outweigh the possible failure of the technology/asset.

The report further illustrates bitcoin ‘s divergence as a standard risk asset by comparing it to year-to-date numbers through May 3 for the Nasdaq 100 stock index. At that point. The Nasdaq 100 suffered a -20% drop, while BTC only fell -15%.

The fact that the most fluid commercial vehicle in the world, 24 hours a day, 7 days a week, Bitcoin , down just 15% in 2022 as of May 3, versus the Nasdaq 100 stock index’s 20% may herald the transition from cryptocurrencies to a risky asset.

In May 2018, Bitcoin fell below its 50-week moving average for the first time in about three years. The stock index remained below this average in November, and when it did, it bottomed out.

This is a topic that we see gaining momentum similar to the advent of the Internet a few decades ago. From the end of 2017 to 2020, the price of BTC fluctuated around the same level as the Nasdaq 100 stock index .

BTC hopes to continue conquering land

As of April 21, the price of cryptocurrencies was about 3 times higher than the stock indicator. We see further potential for Bitcoin to continue doing what it has been doing for most of its existence, outperforming most traditional asset classes.

The separation of traditional assets becomes increasingly important. This is because today the world awaits the last meeting of the Federal Open Market Committee (FOMC), as the Federal Reserve continues with the quantitative tightening. The report notes that Bitcoin is well-positioned to outperform a broader market cap in the face of “potentially overextended stock prices.”

However, Bitcoin seems to be deviating from the political decisions of the central banks. The latter indicate a mild bear market compared to historical bear markets. As can be seen recently, during the last phases of adjustment, Bitcoin rises.

While the report indicates another drop expected because the Fed has just started the tightening process, Bloomberg Intelligence points to ” HODl behavior “. It shows more addresses and new addresses alike holding your bitcoin . This HODL mentality gives rise to the expectation of a much milder recession than previously seen in the face of negative economic shocks from the Federal Reserve.

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