Bitcoin Will Outperform Other Assets As Economic Tides Turn: Bloomberg Intelligence

Mike McGlone – Senior Commodity Strategist at Bloomberg Intelligence – sees the top two cryptocurrencies outperforming other assets as the economy returns to bull territory.

The analyst said that Bitcoin in particular may be in the early stages of trading more like a safe haven, such as government bonds or gold.

Draw on the bottom

According to Bloomberg’s crypto outlook report released on Wednesday, the fact that commodities appear to have peaked may have implications that Bitcoin has bottomed.

“As the waning economic tide turns, we see that propensity resume for Bitcoin, Ethereum and the Bloomberg Galaxy Crypto Index to outperform most major assets,” the document said.

Historically, cryptocurrencies such as Bitcoin have shown a propensity to trade like high-beta technology stocks. The primary digital resource was ranked one of the best-performing assets during the low-rate environment in 2021, but has since fallen about 70% from its all-time high as the Fed continues to tighten.

However, most of Bitcoin’s downside volatility was experienced in June, while its third quarter performance was remarkable stable compared to other goods and assets. Bloomberg argued that this gives the potential for Bitcoin to move into a risky asset in the last quarter of the year.

Compared to a tech stock like Tesla, the analysts believe Bitcoin may have bottomed out when weighed against the automaker.

Although both represent rapidly advancing technologies, the report says Bitcoin could see a long-term performance advantage due to its uniquely limited supply. While Bitcoin’s supply inflation rate will fall below 1% by 2025, Tesla has averaged a 5% increase in shares outstanding each year for over a decade.

It also noted that October has historically been Bitcoin’s best month since 2014, with an average increase of 20% since then.

Ethereum’s Outlook

On Ethereum, analysts said it is currently trapped in a “cage” between $1,000 and $2,000 — yet still outperformed the NASDAQ 100 in 3Q.

“The tech nascent and more volatile No. 2 crypto tends to outperform the stock index on the way up, but the merger could mark a turning point for Ethereum to also beat the Nasdaq 100 as it falls,” they continued.

Bloomberg highlighted Ethereum’s utility as a “cryptodollar” platform as a key use case that will drive its adoption and price higher in the future.