Both bitcoin and gold have been popular with investors looking for an alternative to US dollars. Photo: iStock

In its latest report, Bloomberg says it is bullish on bitcoin – “a digital version of gold.”

The July edition of the “Bloomberg Crypto Outlook,” published by the Bloomberg Galaxy Crypto Index, lays out new arguments that show how the cryptocurrency is on its way to becoming digital gold, thanks to mass adoption and central bank inflationary policy.

Bloomberg states that bitcoin’s volatility will continue to decrease until the cryptocurrency is no longer a speculative asset. At the same time, the crypto will continue to outperform Ethereum (ETH), XRPLitecoin (LTC) and other altcoins.

Bloomberg says bitcoin has been the top performer in the key area of adoption. It notes that there is a direct relationship between adoption levels, market demand for the top crypto and, consequently, supply.

The report says, “Most gauges point to increasing bitcoin adoption, which due to diminishing supply would need to reverse for the price to decline. The underperformance of the broader market … is a trend we expect to endure, particularly in an environment favoring a digital version of gold.”

The best example of increasing bitcoin adoption is arguably recent acquisitions by the Grayscale Bitcoin Trust (GBTC), which is purchasing the crypto at a rate that exceeds the output of mining. Bloomberg says Greyscale expects the asset to reach new all-time highs relatively soon.

The report concludes that central bank policy will be another important factor contributing to the crypto’s performance – money supply expansion will drive up its price.

Bloomberg expects bitcoin to reach $12,000 in the short to medium term – unless the number of active bitcoin addresses falls.

Bitcoin was priced at $9,409 at the time of publication, according to CoinMarketCap.