This week, Bloomberg released a very bullish report on Bitcoin, predicting the leading crypto asset price will hit $20,000 by the end of this year.
Bloomberg's Mike McGlone took a deep dive into the current states of the crypto market and particularly Bitcoin's increasingly strong fundamentals in light of the COVID-19 pandemic. This week, we're breaking down the key takeaways from the report and what it means for Bitcoin.
Impending Bull Run:
The report highlights the unique conditions for Bitcoin's success, pointing to the recent halving event and a looming global recession as two potential triggers.
"This unprecedented year of central-bank easing is accelerating the maturation of the first-born crypto toward a digital version of gold, while accentuating oversupply constraints in most of the market."
Bloomberg also highlights that Bitcoin is mirroring its performance following the 2016 halving, leading to its peak in 2017. After declining by 60% in 2014, Bitcoin rebounded in 2016 to hit its 2013 high. Now, four years later and the second year after BTC's 75% decline in 2018, Bloomberg predicts the leading cryptocurrency will reach its record high of $20,000 again by the end this year.
Gold & Bitcoin Unite:
Bloomberg picked gold and Bitcoin as their top candidates to advance in 2020, adding that the two assets are becoming more closely correlated. "At the highest-for-longest 52-week correlation and beta ever vs. the metal, the first-born crypto should continue to advance for reasons similar to gold, fueled by unprecedented global central-bank easing," explained McGlone.
Bloomberg also predicts that gold will extend its peak vs. the broad commodities from 40 years ago. According to the report, gold is consolidating above what had been a key resistance of $1,700 an ounce before the March swoon. Every day that gold advances above this level, it becomes more likely that the precious metal will rally.
Since there will only ever be 21 million BTC in existence and 87% have already been minted, Bitcoin is becoming increasingly scarce. Bloomberg highlights that Bitcoin on-exchange is absorbing 25% of its annual supply. Particularly, Grayscale Bitcoin Trust is consuming a significant portion of new Bitcoin. In 2020, the Trust bought about 25% of new Bitcoin-mined vs. less than 10% in 2019. Grayscale's total assets under management have risen to $3.8 billion, a nearly 50% increase over the year.
Another massive week for Grayscale.— Kevin Rooke (@kerooke) June 4, 2020
Grayscale added 9,503 BTC to their Bitcoin Trust since last week (28,413 BTC since the halving).
Bitcoin miners only produced 6,863 BTC since last week (19,200 BTC since halving).
🚀🚀 🚀 pic.twitter.com/BGHKcbiJwQ
On Coinscrum Markets podcast Ray Sharif-Askary, director of investor relations Grayscale, elaborated on the company's recent growth. "This has been a record year—a record quarter for us. Candidly, we've never seen demand like this before for our products.” Sharif-Askary added that the increase in interest is largely due to institutions looking for a hedge and unprecedented monetary stimulus.
Bloomberg's analysis concluded that something would need to go "really wrong for Bitcoin not to appreciate," which is good news for Grayscale, who now owns close to 2% of the total supply.
New all-time highs could be right around the corner for the leading crypto asset if market conditions continue to create a supply and demand constraint.
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