Despite the latest downfall of the crypto market, the projection of Bitcoin (BTC) to cross the $100k threshold stays seen as a matter of time. Back in December, Bloomberg Intelligence indicated that the anticipated mark would occur ultimately “due to the economic basics of increasing demand vs. decreasing supply,” and new information shed some gentle on that concept.
Bitcoin Vs. Crude Oil
In a brand new Bloomberg Intelligence report, information reveals traits that might favor Bitcoin and Ethereum costs.
The report famous that “Representing advancing technology, Bitcoin is gaining traction as a benchmark global digital asset, while oil is being replaced by decarbonization and electrification.”
Lack of provide elasticity is an attribute shared by Bitcoin and Ethereum that “sets them apart from commodities”.
For commodities, “rising prices thwart demand and increase supply”, however the high cryptocurrencies would possibly inform a distinct story.
“Increasing Bitcoin and Ethereum demand, and adoption vs. diminishing supply, should follow the basic rule of economics and raise prices.”
In the next chart, Bloomberg reveals a juxtaposition of the reducing BTC and ETH provide together with the surplus of crude oil and liquid-fuel manufacturing in comparison with consumption heading towards 13% in 2023, noting that the U.S. “has been a top headwind for commodity prices”.
Source: Bloomberg Intelligence
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Experts assume that BTC “is well on its way to becoming global digital collateral”, whereas its revolution within the “digitalization of finance” is in its early days. Future mainstream adoption will result in elevated demand for bitcoin.
The report predicts that the longer term developments within the macroeconomics and politics of the U.S. –greenback dominance, jobs, votes, taxes, and the purpose to oppose China’s insurance policies and discover leverage towards them– will lead U.S. policymakers into creating correct laws for cryptocurrencies and ETFs.
Beyond El Salvador adopting BTC as authorized tender, the proximity of the U.S. midterm elections has evidenced the American senators and politicians’ race to comply with alongside. In Wyoming, Arizona, and Texas politicians are pushing to show the digital coin right into a authorized tender, pointing at Bitcoin as a brand new defining issue to get effectively positioned within the polls.
A wider acceptance of bitcoin is anticipated to occur with extra regulatory readability as a result of worry and misinformation may diminish, thus extra buyers would leap in which means mainstream adoption.
The report additionally notes that this higher mainstream adoption of Bitcoin is wanting unstoppable, which might doubtless profit its value.
“The launch of U.S. futures-based exchange-traded funds in 2021 appears as a baby step by regulators that we think culminates with ETFs tracking actual cryptos via broad indexes.”
Bloomberg information reveals that “Rising demand, adoption and depth of Bitcoin should leave few options for volatility but to decline.” For this cause, they assume it’s going by way of a “price-discovery stage”.
The following chart reveals “the upward trajectory of Bitcoin futures open interest vs. the downward slope in the crypto’s volatility vs. the stock market”, noting that Bitcoin’s 260-day volatility is 3x of the Nasdaq 100, which contrasts its volatility throughout the launch of futures in 2017, which was nearer to 8x.
Source: Bloomberg Intelligence
Regarding the Federal Reserve’s tightening measures, Bloomberg specialists had beforehand predicted that “Bitcoin will face initial headwinds if the stock market drops, but to the extent that declining equity prices pressure bond yields and incentivize more central-bank liquidity, the crypto may come out a primary beneficiary.”
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Bitcoin recovering at $40,775 within the each day chart | Source: BTCUSD on TradingView.com