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13 August 2022
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Bloomberg: The Bitcoin price will surge due to these 3 factors

  • A Bloomberg Galaxy report predicts an imminent rise in the price of Bitcoin (BTC) driven by 3 factors.
  • Bloomberg also expects that the price volatility of Bitcoin (BTC) will continue to decrease as the cryptocurrency moves toward a form of digital gold.

The July edition of the “Bloomberg Crypto Outlook” report, published by the Bloomberg Galaxy Crypto Index, presents a bullish scenario for Bitcoin (BTC). The report lays out new arguments that show how the cryptocurrency is in the process of transitioning to a form of digital gold. The arguments can be summarized in BTC’s just mentioned transition to digital gold, the adoption and the central bank inflationary policy.

On the first argument, Bloomberg states that Bitcoin’s volatility will continue to decrease until the cryptocurrency is no longer a speculative asset. At the same time Bitcoin will continue to outperform Ethereum (ETH), XRP, Litecoin (LTC) and other altcoins, as Bloomberg states:

Bitcoin is becoming more like gold in an increasingly favorable macroeconomic environment (…) we believe it will continue outperforming most peers. Similar to the yellow metal, our indicators remain price-positive for the benchmark crypto to continue outshining the broader market.

According to the report, Bitcoin is showing a 12% drop in the last 365 days. Although in recent months, BTC has been overtaken in terms of performance by Ethereum (ETH), the second largest cryptocurrency by market capitalization presents a 21% loss in the same period. While XRP have fallen by 56% and Litecoin by 65.2%.

Bitcoin wins in demand

Despite the above, Bloomberg states that Bitcoin has been the biggest winner in the most important area of all: adoption. The report states that there is a direct relationship between adoption levels, market demand for BTC and, consequently, supply. Therefore, Bloomberg states the following:

Most gauges point to increasing Bitcoin adoption, which due to diminishing supply would need to reverse for the price to decline. The underperformance of the broader market (…) is a trend we expect to endure, particularly in an environment favoring a digital version of gold.

The adoption of Bitcoin is most clearly shown by examining the Grayscale Bitcoin Trust (GBTC). During 2020, the institution has been a great example of demand as it has seen a large increase of buyers. Data indicate that it has even bought more of the BTC produced by miners in a given period of time. Bloomberg confirms that the GBTC is consolidating around its 52-week and therefore expects the asset to reach new all-time highs.

Finally, the report concludes that central bank inflationary policy will be another important factor in Bitcoin’s performance. The policy will support the appreciation of Bitcoin as it continues to consolidate as digital gold. Therefore, Bloomberg concludes that the crypto market will only rally if Bitcoin does.

Bloomberg expects adoption to drive the price of BTC to levels similar to 2019. Based on historical patterns, BTC could be close to $12,000 in the short to medium term. This will only reverse if the number of active addresses using Bitcoin drops, according to Bloomberg.Bitcoin BTC

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