The bitcoin price It could move towards the $ 50,000 mark in the near future, as investors fund gold and bet on the cryptocurrency space, according to Bloomberg senior commodities strategist Mike McGlone.
In the February 2021 issue of "Bloomberg Crypto Outlook," McGlone wrote that he believes the bitcoin price is showing strong support around the $ 30,000 mark and that "increasing institutional adoption and the potential for the benchmark to become a global reserve asset" could see the coin move to $ 50,000.
The report noted that funds were moving from gold to BTC and highlighted the growth of Grayscale's Bitcoin Trust (GBTC), in contrast to the overall decline in known gold holdings in exchange-traded funds (ETFs), GBTC has grown up to 10% of "$ 210 Billion Tracking Gold ETFs".
The analyst wrote that resistance from low interest rates, quantitative easing, and rising debt relative to GDP may have been supporting BTC and gold. GBTC's bitcoin holdings have risen to nearly 700,000 BTC, while gold ETFs have seen their gold holdings drop to roughly 109 million ounces, from an October peak above 111 million.
“In a world going digital, it's logical to expect more funds to flow into Bitcoin and away from precious metals. The outflows of funds traded on the gold exchange and the inflows of products that follow the reference crypto support a possible paradigm shift ”.
McGlone noted that "in the absence of a major technological flaw," gold allocations are "primarily at risk if Bitcoin it becomes a reserve asset ”. As such, investing between 1 and 5% of the personal portfolio in the flagship cryptocurrency "has become increasingly prudent."
The increasing volatility of the stock market, he wrote, has historically been beneficial to both gold and bitcoin. While volatility has been used in the past to criticize crypto as an investment, the strategist noted that a combined investment in BTC and XAU shows a 260-day volatility rate of 30%, lower than that of the S&P 500, in 35%.
The BTC volatility it could match that of gold by 2024 as the market matures. Its current 260-day volatility is 50%, which McGlone compared to the volatility of gold in 1980. For bitcoin to become less volatile than gold, he wrote that it doesn't have to do much:
"To approach this milestone, Bitcoin may simply have to maintain what it has been doing: appreciating in price and maturing."
McGlone, it is worth noting, has predicted in the past that the bitcoin market capitalization would reach $ 1 trillion in 2022. The strategist also referred to Ethereum in his report, stating that the $ 1,000 mark is turning into a support level that is "unlikely" to break.