Bitcoin and Ethereum solidified support bases in June and July, says the Bloomberg report, and Analyst Mike McGlone maintains that bitcoin turned the US$40,000 level into new support and could be on its way to US$100,000
The bull markets for bitcoin and ether solidified support bases in June and July, according to the market report Bloomberg Crypto Outlook, published this Wednesday, August 4th. Specifically, on bitcoin, the report notes that it has built a base of US$30,000, which is similar to the US$4,000 level, which is held in early 2019.
“There have been similarities in performance that put bitcoin on the way to US$100,000,” says Bloomberg Intelligence Chief Strategy Officer Mike McGlone.
The report also states that the current macroeconomic context favors both bitcoin and gold. “The resurgence of deflationary forces indicated by declining US Treasury yields and booming commodities are in favor of gold and bitcoin. The analog and digital store of value advance together, “say the analysts.
According to Bloomberg analysis, the bitcoin price curve has been below its 20-week moving average in its longest period since 2018-2019, which would be a bullish sign. “Supply is declining while demand and adoption are increasing in most countries that welcome open discourse and free-market capitalism,” the study states.
In the graph below, Bloomberg highlights the similarities of the current position of the price of BTC (bars), below the 140-day moving average (gold line), which also occurred at the end of 2018. At that time, three years ago, there was a bullish rally in the following months.
“Bitcoin is ready to turn US$40,000 into support. This year is the best for bitcoin to take the next step in its price discovery stage and see a renewed bull market, ”the report states.
Bitcoin as a hedge against inflation
In a prospective for the second half of the year, Bloomberg highlights to investors the three assets it considers dominant: bitcoin, gold, and long-term treasuries.
The fact that metal and Treasury prices have been advancing for decades, and recently declined, improves their relative value, yet gold looks increasingly bare if not paired with Bitcoin. Cryptocurrencies represent a rapid technological advance that puts pressure on inflation and the expansionary monetary policy that drives the stock market.Bloomberg.
Ethereum continues to show higher returns than bitcoin, the study highlights. Bloomberg’s cryptocurrency index, the Galaxy Crypto Index, rebounded 8% in July and shows a 105% appreciation in 2021. This index is made up of 40% bitcoin, 40% ether, and 20% other cryptocurrencies.
For its part, bitcoin had a rebound of 20% in July and 32% so far this year. Ethereum lags behind in July at 11%, but dominates in annual appreciation at 237%, Bloomberg notes.
At the time of writing, bitcoin is trading at US$43,422, according to the CriptoNoticias price index. Ether (ETH), the cryptocurrency of Ethereum, surpassed US$3,000 this Saturday, August 7th, for the first time since May.
It is currently registering the price of US$3,099.
About Bloomberg Galaxy Cypto Index (BGCI)
The Bloomberg Galaxy Crypto Indices were launched by Bloomberg Index Services Limited and Galaxy Digital Capital Management. The Bloomberg Galaxy Crypto Index (BGCI) is a capped market capitalization-weighted index designed to measure the performance of the largest digital assets traded in USD. Eligible index constituents are diversified across different categories, including stores of value, mediums of exchange, smart contract protocols, and privacy assets. The Bitcoin (BTC) and Ethereum (ETH) Indices are designed to measure the performance of a single digital asset traded in USD.
The Bloomberg Crypto Outlook is a monthly publication that brings you our latest fundamental analysis, data, and insight on the broad market, Bitcoin, and top cryptos.