- Bloomberg expects bitcoin to revisit its record high reached in 2017 and double to $US20,000 this year, according to an analyst note published Tuesday.
- The firm sees bitcoin breaking away from other cryptocurrencies, and says the digital currency has increasingly favourable fundamentals and technicals.
- Bloomberg says the same forces pushing gold higher also support bitcoin, and that the coronavirus is accelerating bitcoin’s maturity relative to the stock market.
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Last week, Goldman listed five reasons why bitcoin should be avoided by investors.
The most popular cryptocurrency has so many favourable fundamental and technical factors that “something needs to go really wrong for bitcoin to not appreciate,” Bloomberg said.
The company said history indicates bitcoin should return to $US20,000 in 2020, representing roughly a double from current levels.
“Bitcoin will approach the record high of about $US20,000 this year, in our view, if it follows 2016’s trend,” according to Bloomberg.
The maturation of bitcoin, fuelled by the growing acceptance of digital currencies, the ability to trade bitcoin futures, and a steady decline in volatility, should keep it tilted toward price appreciation, the research note said.
Additionally, Bloomberg expects bitcoin to appreciate if the stock market rolls over.
Technically, bitcoin has solidified the $US8,000 level as support, and could move higher if it decisively breaks above the $US10,000 level, which echoes recent comments from technical analyst Katie Stockton.
Bloomberg said it thinks that bitcoin is benefiting from the coronavirus pandemic, for several reasons.
First, historic declines in equity markets because of the virus didn’t spill over to bitcoin, as a brief dip in the cryptocurrency was “promptly rejected,” Bloomberg said.
Second, the virus is accelerating the shift away from paper currency toward digital.
And third, new quantitative easing policies from central banks around the globe are “helping independent stores of value such as gold and bitcoin,” according to Bloomberg.
But Bloomberg’s bullish view on bitcoin doesn’t translate to other cryptocurrencies like ethereum.
“We see little upside in ethereum price absent a rising tide from bitcoin. [Bitcoin] is breaking away from the pack in terms of adoption and is supported by almost ideal macroeconomic conditions for stores-of-value amid quantitative easing,” Bloomberg said.
Bitcoin traded up 1% to $US9,762 on Wednesday.