Bitcoin and Ethereum may ‘regain advantage’ as risk relative to stocks decreases, data shows
The two largest digital assets by market capitalization – Bitcoin (BTC) and Ethereum (ETH) – continue their slow but steady progress over the past few days and weeks, helping the entire cryptocurrency market move higher and showing relative strength compared to traditional assets.
Meanwhile, Bitcoin and Ethereum could continue their growth and even “regain advantage” as they register very low volatility and risk compared to the stock market, according to the new Bloomberg Intelligence report shared by Senior Commodity Strategist Mike McGlone on Nov 3.
In particular, the volatility of BTC and ETH, as well as the Bloomberg Galaxy Crypto Index (BGCI), has fallen to low levels compared to most other assets, which, according to the report, “may tilt the risk against those who do not accumulate partial crypto exposure.”
“Cryptos Can Recover” Despite Fed
As the report emphasizes, “cryptoassets’ period of outperformance in 1H20 was characterized by very low volatility relative to the stock market, and there are potential parallels into 2023,” meaning that “Bitcoin, Ethereum, crypto gains look set to resume.”
“A top headwind for most risk assets is the Federal Reserve intensifying tightening as stock prices and global GDP growth slow, but cryptos are showing signs that they may resume their propensity to outperform.”
Further, the report notes that the Fed’s ‘sledgehammer’ approach could be setting the stage for Bitcoin, as “the price of around $20,500 on November 2, with one-year federal funds futures (FF13) signaling rates near 4.75%, was about the same as in June, when FF13 was close to 3.5%.”
At the same time, this ‘sledgehammer’ appears to strengthen Ethereum’s foundation at “around $1,000, (…) potentially building a base around the 2018 peak, when global liquidity peaked around plus 14%.”
Finally, the report also noted that supplies of both decentralized finance (DeFi) are declining year-on-year, and concluded that the continuation of this trend supports the growth of their prices.
Bitcoin and Ethereum Price Analysis
As things stand, at press time Bitcoin was changing hands at $20,597, up 1.28% on the day, as well as 2.07% on the week, according to data obtained by Finbold on November 4.
In parallel, Ethereum also recorded progress during the observed periods, gaining 2.25% in 24 hours and 5.03% during the week, and is currently trading at $1,581.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
