Commodity analysts at Bloomberg say crypto assets are gearing up to outperform the rest of the financial markets.
In the latest Bloomberg Intelligence: Crypto Outlook report, analysts Mike McGlone and Jamie Douglas Coutts say Bitcoin (BTC), Ethereum (ETH) and the Bloomberg Galaxy Crypto Index (BGCI) altcoins are poised to eclipse everything else when markets finances turn. bullish again.
Bloomberg analysts say digital asset markets could come to life on the narrative that Bitcoin is becoming a risky asset rather than being closely correlated to stock markets.
“That the only major asset class to rally in 1H – raw materials – may have recorded a long spike has implications for a bottom in Bitcoin. When the downward economic tidal shifts, we see the propensity picking up for Bitcoin, Ethereum and the Bloomberg Galaxy Crypto Index to outperform most major assets. Rate hikes by more central banks than ever are a strong headwind.
But it’s the benchmark crypto’s potential to become a risky asset like gold and US Treasuries that could play out in 2H. Since 2014, October was the best month for Bitcoin, with average gains of around 20%, and in Q3, BGCI rose around 16% against 5% declines for the Nasdaq 100 and S&P 500. Ethereum’s transition to proof-of-stake may help it build a base above $1,000 and Bitcoin around $20,000.
When it comes to Ethereum, Bloomberg analysts say the recent successful merger of the second-largest blockchain by market capitalization with proof-of-stake has helped it enter a new chapter. According to strategists, ETH may be at a point where it becomes more stable than traditional financial instruments during macro bear markets.
“Ethereum Leapt Forward with Proof-of-Stake Merger in September, With Price Implications
performance. The #2 crypto tends to respect support and resistance at major round numbers, and $1,000 to $2,000 has been its cage.
Around $1,000 is a key support and our chart shows Ethereum outperforming the Nasdaq 100 index in Q3. The nascent tech and more volatile No. 2 crypto tend to outperform the stock index on the upside, but the meltdown may mark an inflection point of Ethereum also beating the Nasdaq 100 when it declines.
Bloomberg analysts are also optimistic that USD-pegged stablecoins, the most widely traded type of crypto asset, rely primarily on the Ethereum network to function.
“The most traded digital assets are crypto dollars, which are tokens that track the greenback, made possible primarily by Ethereum. We like to ask what stops the tokenization of most assets and it may only be a matter of time.
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