Mike McGlone, senior commodities strategist at Bloomberg Intelligence, sees the two major cryptocurrencies outperforming other assets as the economy returns to bullish territory.
The analyst said Bitcoin, in particular, could be in its early stages of trading more like a safe-haven asset, such as Treasuries or gold.
Signs of a fund
According to Bloomberg’s crypto perspective report published on Wednesday, the fact that commodities appear to have peaked may have implications that Bitcoin has bottomed out.
“When the economic tide goes out, we see the propensity pick up again for Bitcoin, Ethereum and the Bloomberg Galaxy Crypto Index to outperform most major assets,” the paper says.
Historically, cryptocurrencies like Bitcoin have shown a propensity to trade like beta high-tech stocks. The main digital asset was classified one of the best-performing assets during the low interest rate environment of 2021, but has since fallen roughly 70% from its all-time high as the Fed continues to tighten.
However, most of Bitcoin’s downside volatility was experienced in June, while its third quarter performance was remarkable stable compared to other goods and assets. Bloomberg stated that this provides the possibility for Bitcoin to become a risk-free asset during the last quarter of the year.
Compared to a tech stock like Tesla, analysts believe Bitcoin may have found its bottom when compared to the automaker.
While both represent rapidly advancing technologies, the report claims that Bitcoin may see a long-term performance advantage due to its limited supply. Although the inflation rate of Bitcoin’s supply will fall below 1% by 2025, Tesla has increased its outstanding shares by an average of 5% each year for more than a decade.
He also noted that October has historically been Bitcoin’s best month since 2014, with an average of 20% gains since then.
On Ethereum, analysts said it is currently stuck in a “cage” between $1,000 and $2,000, but nevertheless outperformed the NASDAQ 100 in the third quarter.
“The nascent tech and #2 most volatile crypto tends to outperform the stock index on the upside, but the merger may mark a turning point for Ethereum also outperforming the Nasdaq 100 when it declines,” they continued .
Bloomberg highlighted Ethereum’s utility as a platform for “crypto dollars” as an important use case that will drive its adoption and higher price in the future.
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