Full text of Bloomberg’s August cryptocurrency outlook report: Bitcoin will return to $100,000

Report focus:

  • Bitcoin and Ethereum are in the “discount bull market” stage
  • Comparability analysis of Bitcoin, gold, and U.S. debt to see the power of trends
  • Bitcoin hash rate VS crude oil: Bitcoin is expected to be bullish
  • Highlights of the second half of the year: Bitcoin, Ethereum, U.S. dollar advantage

Summary of the report:

The latest Bloomberg Crypto Outlook 2021 (Bloomberg Crypto Outlook 2021) gives an optimistic outlook for Bitcoin, and it is expected that the benchmark cryptocurrency (Bitcoin) will return to the $100,000 orbit.

According to the Outlook report, “For most of the history of Bitcoin, the trend changes that occurred in about three years are sufficient to sustain more development (that is, the current price is bullish). Especially in most countries, open encryption technology discussions and free markets are welcome. Under the environment, supply is declining, while demand and adoption rates are rising.”

The report pointed out that “Bitcoin is becoming digital gold. In such a world, free market capitalism is rising through digital assets. Unless the trend continues to be reversed, the US dollar and Bitcoin are bound to become the main beneficiaries.”

Regarding Bitcoin’s destruction of traditional financial markets, the report pointed out that “when opinions against long-term trends become a consensus, the probability tends to tilt towards a lasting trajectory. This is the bullish prospect of Bitcoin that we expect to see.”

The report also contains 10 charts showing the trend of Bitcoin relative to bond yields, gold prices, low-priced cryptocurrencies, and crude oil, all of which have detected bullish signs.

In addition, with regard to the negative impact in Asia, the report stated that “the Bitcoin hash rate may have been completed, the largest plunge in the Bitcoin hash rate in history may be over, and the price will continue to rise.”

Regarding the Bitcoin energy dispute, the report pointed out that “in addition to enhancing renewable energy and helping governance, the use of natural gas is helping Bitcoin mining solve risk problems.”

In summary, the report points out the fundamentals of Bitcoin’s bullish foundation and defines its advantages as a hedge against inflation: “[Bitcoin] represents a rapidly developing technology that puts pressure on inflation and will support quantitative easing, thereby boosting the stock market. .”

Star Finance compiled the original text:

According to statistics: Bloomberg Galaxy Cypto Index (BGCI) rose 8% in July 2021, 105% from early 2021 to August 3; Bitcoin rose 20% in July, and 32% from early 2021 to August 3; Ethereum An increase of 11%, and an increase of 237% from the beginning of 2021 to August 3.

Bitcoin and Ethereum are currently in the “discount bull market” stage

In our opinion, Bitcoin and Ethereum are still in the “discount bull market” stage, and the trend of June and July resumed their price trajectory under the threat of major macroeconomic and risk events. At the macro level, the decline in U.S. Treasury yields and the peaking of commodity prices show that deflationary forces are resurging, all of which have added support to the prices of gold and Bitcoin.

In July, we saw the price of digital currencies increase together with the locked value. The acceleration of the digitalization of digital currency and finance has strengthened the free market capitalist nature of cryptocurrency assets and the drawbacks of being strictly controlled. The United States is embracing digital assets by strengthening supervision and does not rule out the hostility of other important markets, but all this is currently beneficial to Bitcoin and the US dollar. On the market side, excessive speculative behavior has been eliminated, Ethereum has won a position worthy of partnering, and most of the stress factors are long-term bullishness.

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: The current USD 30,000 interval is similar to the USD 4,000 interval from 2018 to 2019

Refer to the chart above. This is the longest period since 2018-19 that Bitcoin has fallen below its 20-week moving average (white line), indicating that weak bulls have been cleared in a protracted bull market. For most of Bitcoin’s history, the changes that have occurred in about three years are enough to sustain more changes (expected price increases). Especially in an environment where most countries welcome encryption technology and free market capitalism, supply is declining, while demand and adoption rates are still rising.

In summary, we believe that Bitcoin seems to have established a support base of approximately $30,000. The current stage is equivalent to $4,000 at the beginning of 2019. Some similar performance signals may suggest that the benchmark cryptocurrency will return to the track of $100,000.

On the other hand, Ethereum also continues to be bullish, and what used to be resistance has now become support.

Referring to the figure below, the Bloomberg Galaxy Encryption Index (BGCI) has risen by about 105% from the beginning of 2021 to August 3, and we see a greater probability of further upward tilt.

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: In 2017, the price trend comparison of Ethereum (yellow) and BGCI index (white line)

The BGCI index (white line) is composed of 40% Bitcoin and 40% Ethereum. It has been revised sharply from the bottom of 2018 to the historical high of 2021. From the chart above, it seems to be well supported. In the past three years, we have seen technical trend adjustments and broader bullish support.

We believe that in such a world of encrypted assets, Bitcoin is becoming digital gold, and Ethereum is the entry platform for digital currency and financial digitization. Tether is the most widely traded cryptocurrency in the world, which is a digital dollar token based on Ethereum.

In addition, the most important factor for crypto assets is that U.S. dollar transactions dominate cryptocurrency transactions.

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: Digital Token Winner-USD Stable Coin

According to the above chart, sorted by Coinmarketcap’s trading volume, three of the top five cryptocurrencies traded are USD stablecoins.

Through digital assets, global free market capitalism is on the rise, and unless the trend continues to reverse, the U.S. dollar and Bitcoin will become the main beneficiaries.

Therefore, we believe that Bitcoin gains will be supported as the bull market respites with nearly $40,000 in spending. This year is still the best time to take the next step in the Bitcoin price discovery stage. We have seen a new bull market.

Comparability analysis of Bitcoin, gold, and U.S. debt to see the power of trends

We expect Bitcoin and gold to follow the rising trajectory of U.S. Treasury bond prices in the second half of the year. The bear market consensus in the first half of the year will prove to be temporary, and the possibility of a longer-lasting bull market opportunity for the current discount is also rising. We suggest to be a friend of trends, especially in the field of Bitcoin and long-term bonds.

When the view of countering long-term trends becomes a consensus, the probability tends to tilt towards a more sustained and lasting trajectory. Unless the fundamental drivers are reversed, there is a high probability that the current buyers who are responsive to the cryptocurrency market will benefit rather than making new short trades.

The chart below depicts the deep-rooted inverse trajectory of bond yield decline (white line) and Bitcoin price increase (yellow bar). 

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: U.S. Treasury yields (white line) and Bitcoin liquidity index (yellow line) in the past 10 years

According to the chart above, we see that Bitcoin’s bullish foundation is improving, which is in favor of a lasting trend. The main reason is that negative yields in Japan and most of Europe have a downward driving force on U.S. debt, which will increase the value of digital reserve assets (Bitcoin).

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: Gray line: S&P 500 Index ETF trust, green line: 20-year US Treasury ETF; pink line: crude oil futures trend; white line: Bitcoin, yellow line: gold

Through a two-month data comparison, referring to the above chart, we expect that Bitcoin, gold and US long-term bonds will be the top assets with outstanding performance in the second half of the year.

The prices of precious metals and Treasury bonds have been rising for decades and have recently fallen. This fact has increased their relative value. Compared with Bitcoin, it is not difficult to find that gold is almost flat without any fluctuations.

In addition, crude oil fell by about 4% in the first half of the year and U.S. bond prices rose. Copper and crude oil may reach their peaks in the first half of the year. If the stock market is unstable, high correlation or expected downside risks will be greater.

Bitcoin hash rate and crude oil futures do not seem to have much in common, but some reversals of crude oil futures prices from extreme levels have an optimistic impact on cryptocurrencies. During the ongoing bear market, crude oil may have reached its peak in July, which has put pressure on bond yields, and the possibility that the Bitcoin Harbin interest rate will rise after a sharp drop has increased.

Encryption technology represents a rapidly evolving technology that puts pressure on inflation and supports quantitative easing, thereby boosting the stock market. The above chart shows that Bitcoin is expected to re-establish its leadership in 2021, and as of August 3, its growth rate in the second half of the year is about 10%.

Bitcoin hash rate correction may be completed

The biggest plunge in Bitcoin’s interest rate in history may be over, and if the previous pattern reappears, the price will continue to rise.  

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: Is the short-term pain for greater long-term gains? White line: Bitcoin 10-day hash rate; yellow line: Bitcoin weekly trend, pink line: 20-week moving average.

Refer to the figure above, Bitcoin’s 10-day Harbin interest rate has fallen by about 30% on the basis of its 20-week average. Previously, the rate of decline has never been so extreme. We believe that this is a temporary decline in the Bitcoin price trend.

The graph above shows that Bitcoin’s hash rate bottomed out in similar declines in December 2018 and May 2020. As Bitcoin mining shifts from China to more sustainable jurisdictions (especially the United States).

In addition, natural gas combustion can help Bitcoin mining solve some of the high energy consumption problems. In addition, the increased use of renewable energy will also optimize the governance of the cryptocurrency market.

In summary, the trough of our Bitcoin bull market seems to have ended, and the end of the crude oil rally may provide support for cryptocurrency prices. Crude oil is the most important commodity in the world, accompanied by inflation and U.S. Treasury yields. The maintenance of US long-term bond yields below 2% indicates deep-rooted deflationary forces, which will also support the price of Bitcoin.

When prices go against a more permanent fundamental trend, it usually only takes a slight catalyst to trigger some reversal, especially as we have observed this possibility in overheated crude oil and sluggish Bitcoin.

Highlights of the second half of the year: Bitcoin, Ethereum, U.S. dollar advantage

Key points of cryptocurrency outlook for the second half of the year: Bitcoin, Ethereum platform, and USD advantage. As 2021 progresses, we see the momentum of Bitcoin being more widely adopted, and the construction of digital financial technology infrastructure by Ethereum and the dominance of the dollar are still the main themes. The cryptocurrency is 30,000 USD and the support level of Ethereum is about 2,000 USD is being consolidated.

Ethereum looks like a bull resting on an ark. As the digitalization of cryptocurrency and finance is accelerating, we expect to see Ethereum (Ethereum) maintain a trajectory of rising prices. Because we see that more and more companies are more inclined to adopt this technology instead of rejecting it at the risk of falling behind.

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: pink line: ARK innovation ETF trend; white line: Ethereum asset trajectory

The above figure shows the persistent trend that the Ethereum price has outperformed the MVIS CryptoCompare Digital Assets 100 index (white line) since 2017, especially since 2019, superimposed on the similar rising trajectory of the Ark Innovation ETF (pink line).

Ethereum is beating its competitors on the road to $4,000. We believe that its position as a digital platform for financial and cryptocurrency infrastructure will continue to increase, and its price should continue to rise. But compared with Bitcoin, Ethereum’s callback risk is greater.

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: Ethereum is consolidating long positions, white line: Bitcoin trend, yellow column chart: Ethereum weekly column chart

The above chart shows the support of Ethereum (yellow candlestick chart) at around $2,000, and Bitcoin (white line) has also formed a support above $30,000.

We also see the possibility of more price rebounds. Ethereum has been outperforming Bitcoin for about two years, and we look forward to seeing more of the same performance.

In terms of market news, the key takeaway that we got from the group event composed of Elon Musk, Cathie Wood and Jack Dorsey on July 21 Skr admitted that Ethereum is one of his assets.

As the lock-up capacity continues to rise, and the most widely traded crypto asset Tether is the main use case of Ethereum, these will support the reasons for the rising price of Ethereum.

As the global benchmark digital dollar, the 30-day average transaction volume of Tether is more than twice that of Bitcoin, and it has now fallen to the lower limit of the range of about $50 billion and is rising. The increasing adoption of Ethereum token Tether indicates that Ethereum and financial digitization seem to be overwhelming.

Full text of Bloomberg's August cryptocurrency outlook report: Bitcoin will return to 0,000

Legend: Growing digital assets. Pink line: Coinbase’s token market value; White line: Ethereum’s 30-day average trading volume; Yellow line: Ethereum weekly price

Looking at the above chart, we can see that the locked-in market value, 30-day average transaction volume, and the price of Ethereum have been rising in the past three years.

Unless innovation and related digital trends are reversed, the demand and price of Ethereum may continue to rise. Uniswap is the world’s largest decentralized exchange. It operates on the Ethereum blockchain, and Uniswap has approximately half the capacity of Coinbase.

Source|Bloomberg Intelligence Report

Compilation|Esther

Produced|Star Finance BlockGlobe

Original report address:

https://assets.bbhub.io/promo/sites/12/1267019_Crypto-August2021Outlook.pdf?link=button-header

 

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