2020-4-24 20:30 |
Bitcoin will mature into a gold-like store of value this year, according to the latest projections by Bloomberg. The financial magazine’s report, “Bitcoin Maturation Leap,” notes that the cryptocurrency is poised for a bull run, after being temporarily dragged by the coronavirus-induced stock market tailspin.
With its correlation to gold jumping to all-time highs, BTC is poised to transition from a risk-on speculative asset to the crypto market’s version of the metal.
“This year marks a key test for bitcoin’s transition toward a quasi-currency like gold, and we expect it to pass,” the report says. The damage to world economies caused by Covid-19 is prompting governments to dole billions of dollars in stimulus. Bloomberg expects bitcoin to gain amid the circumstances, helped on by mainstream adoption.
Per the report, despite BTC’s annualized volatility that’s averaged about 5x that of the S&P 500 in the past year, the crypto is down 5% in 2020 against 22% for the stock index as at April 2. Bloomberg said:
For more-established assets, this would be considered a sign of divergent strength. For the nascent crypto, it’s also an indication of a transition toward gold-like adoption, maturity and performance.
As digital gold, BTC appeals to the cashless internet economy largely on account of its characteristics that include round-the-clock price transparency, and the lack of limits, interruptions or third-party oversight, notes Bloomberg.
The report shows BTC’s decline this year holding above its 2018 low “which was about an 80% drawdown from the peak.” The stage for a strong comeback is set. It states: “On sounder footing after its previous shakeout, bitcoin is gaining relative fuel as stocks reset, if history is a guide.”
While Covid-19 will witness the enduring decline of cryptocurrencies, BTC, is considered a hedge asset, that will appreciate. “The macroeconomic effects of the coronavirus accelerate bitcoin’s process of gaining value relative to other cryptos.” In the year to April 2, BTC outperformed the Bloomberg Galaxy Crypto Index, surging 40% versus 13% decline in the index.
The Bitcoin futures tamed the BTC bull market, a development Bloomberg interprets in terms of the maturation of the cryptocurrency. “Increasing futures open interest, declining volatility, and relative outperformance despite the stock-market shakeout indicates bitcoin is maturing from a speculative crypto asset toward a digital version of gold,” it added.
What do you think about bitcoin becoming digital gold? Let us know in the comments section
The post Bitcoin to Be Digital Gold in 2020, Says Bloomberg Report appeared first on Bitcoin News.
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