A recent analysis outlines trends in current markets that make gold and its digital counterpart, Bitcoin, highly attractive assets.
Key Takeaways
Further deterioration in economic conditions could fuel positive performance for Bitcoin and gold.
If the current trend continues, Bloomberg analyst expects $20,000 BTC by the end of the year.
The maturation of the Bitcoin market and unparalleled money printing are the prime catalysts for the continuation of this trend.
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Bloomberg analysts are backing Bitcoin and gold as their top candidates to perform in 2020. There are several catalysts in play for BTC that could propel the digital asset to its all-time high in the near future.
Bitcoin and Gold in 2020
Safe-haven assets like BTC and gold are expected to take precedence in investor portfolios as a global economic depression surfaces.
High levels of unemployment, demand and supply shocks, and social unrest in large parts of the world are drawing attention to effective portfolio hedges.
Gold has cemented its place as an economic hedge thanks to its longstanding history as a medium of exchange and store of value. Newcome Bitcoin is paving a similar path by gradually achieving that trust in the market.
Gold and Bitcoin are moving in lockstep again, via Bloomberg.In a detailed report, Bloomberg outlines their thesis for the remaining half of 2020, identifying Bitcoin and gold as protective measures against “unparalleled central bank easing.”
By providing its investors with portfolio protection when the stock market unravels, there is potential for Bitcoin to shoot to mainstream popularity as a better hedge than gold.
Top Reasons for a Continued Bull Market
Bloomberg’s report concludes that a positive year is in store for Bitcoin. Although the report observes a plethora of possible catalysts for Bitcoin, three points stand out.
First, Bitcoin is an uptrend that closely resembles price action from 2016, when the network underwent its second block reward halving from 25 BTC to 12.5 BTC.
“Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend,” wrote Bloomberg’s analysts.
This is a popular narrative within the crypto community, especially since the third block reward halving was implemented a month ago.
The supply reduction tends to skew the network’s economics into a position where demand overpowers supply and causes the price of BTC to appreciate.
Bitcoin’s movement in 2015-16 resembles that of 2019-20, via Bloomberg.Second, Bitcoin has matured quicker than most expected.
This maturation is signified by Bitcoin weathering mega stock market rallies and a crash in crude oil prices, while simultaneously acting as the anchor for the remaining $100 billion of the cryptocurrency market.
Bitcoin derivatives have seen immense growth in the last year, too, with the emerging futures market driving some of Bitcoin’s most noteworthy moves.
The rise of derivatives signals interest from institutional speculators and investors using futures and options to hedge their spot market exposure.
Finally, the chain of events set forth by COVID-19 is shaping a future in which Bitcoin will thrive. People are fighting back against the authority of the state, with massive protests in Hong Kong and the United States cascading across the globe.
On the economic side, COVID-19 has cornered the Fed, and now the bank is attempting to print its way out of the mess – a tactic despised by few but rendered ineffective by most.
As the Fed printed more money, inflows to gold futures rose, via Bloomberg.Nobody can print more gold or Bitcoin. The immutable monetary policy of digital gold may initially seem irrational, but it has redeemed itself in today’s times, receiving plaudits from the likes of Paul Tudor Jones.
As the current states of affairs continue to unravel, Bitcoin and gold could be laying the foundation for a bull run.
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