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Analysts believe that the current decade will favor the outlook for assets such as Bitcoin (BTC) and gold.
Inflation continues to rampage around the world, causing the devaluation of fiat currencies. These processes play into the hands of both Bitcoin (BTC) and gold. Moreover, analysts at Bloomberg Intelligence believe that both of these assets will also remain in a winning position compared to commodities markets in the future, throughout this decade, as the cycle of aggressive tightening of the US Fed’s policy ends.
BTC vs Commodities
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, commented that the current aggressive policies of most of the world’s key central banks are pushing the economy into recession. This could lead to lower prices for commodities and risky assets, which, in turn, could stimulate the growth of gold and its digital counterpart, bitcoin (BTC).
According to McGlone, the Fed will have to take a course to complete the tightening cycle. And under these conditions, “the risk-reward ratio could tilt towards resuming BTC’s sustained upward trajectory, especially against commodities.”
The cost of living crisis means that only the wealthiest people will have enough money left to invest in assets like cryptocurrencies or gold. The rest will have to tighten their belts. However, then, when the world does emerge from the recession, these two assets may become “first choice instruments”.
“The record low cryptocurrency volatility against the Bloomberg Commodity Index (BCOM) may be a harbinger of the return of the ability of bitcoin to outperform its competitors. The 260-day crypto volatility has dipped to new lows. Looking at history, BTC volatility tends to bounce back against commodities as the crypto market aims for new highs.”
In addition, commodities may be under pressure from the fundamental aspects of supply and demand, as well as the consequences of aggressive tightening of the policy of the Central Bank, he adds.
Meanwhile, comparing BTC to its closest rival, gold, McGlone is also opting for digital currency. He considers bitcoin to be a “beta” version of gold and US Treasury bonds. An additional argument in favor of digital currency, the analyst calls its growing mass adoption, combined with a reduction in supply.
Since the beginning of the year, bitcoin has fallen in price by 57%, and gold – by only 11%. However, in a longer two-year perspective, we can see a completely different picture: BTC + 87%, gold almost -13%.
Another factor working in favor of bitcoin is the current situation in the foreign exchange market, where many traditional currencies are devaluing. This was recently announced by CNBC crypto trader Ran Nuner.
As he commented, an important topic of the new cycle is the topic of currency wars, since many currencies and economies may collapse, and many countries may default on debt. Under these conditions, investors will look for the best way to withdraw funds from their local currencies. At the same time, the US dollar is overvalued and overbought. Accordingly, this can bring huge benefits to Bitcoin, making it a winner.
Popular market analyst Murad also recalled on Twitter:
“They said that bitcoin cannot be considered money because it is too volatile. Meanwhile, the centuries-old British pound and Japanese yen have fallen by -22% and -20% this year alone.”
The crypto market has been in ranges since mid-June. The longer they persist, the stronger the support areas become in them. At the same time, the indicator of the total capitalization of the crypto market has recently again been trying to gain a foothold above the previously lost important mark of $1 trillion.
Read the latest on-chain Bitcoin analysis (BTC) can be found here.
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