If bitcoin continues on its current price trajectory, it will become a “digital version of gold,” according to one of Bloomberg Intelligence’s top analysts.
“The primary attributes that underpin the price of gold and bitcoin – limited supply, store of value, diversifier and quasi-currency – will persist in a world of unprecedented quantitative easing, in our view. The benchmark crypto has won the adoption race among myriad copycats and is maturing into a digital version of gold,” wrote Mike McGlone in his latest crypto report.
“Limited supply vs increasing demand is the bottom-line for bitcoin, with macroeconomic underpinnings that support its march toward the market cap of gold, at a price of $500,000 by some estimates.”
While McGlone is generally long-term bearish on altcoins, he believes the stablecoin Tether, which allows users to transact in US dollars, will have a synergistic relationship with bitcoin, which will serve as a store of value like gold.
“Mass adoption of the Tether stablelcoin has negative ramifications for most crypto assets and positive implications for a solitary digital equivalent of gold: bitcoin.”
He continued, “Bitcoin appears as a resting bull market on the back of gold, in our view. Declining volatility – notably vs. equities and gold – indicate bitcoin is gaining an upper hand.
“Bitcoin’s price should keep appreciating for similar macroeconomic reasons that help gold. Like the metal, the benchmark crypto’s bull-market has corrected sharply and had a period of disdain. Fundamentally and technically, a bitcoin base for recovery is firming, but the broader crypto market appears driven more by speculative excesses.”
McGlone believes the current pullback – bitcoin’s price was $10,702 at the time of writing, down from over $12K – is nothing to be concerned about as it has found a new base of support at $10K and will follow gold as it moves higher in response to expansionist monetary policy.
“We see little to halt the ‘gold higher, bitcoin following’ pattern, other than normal bull-market nuances of back-and-fill from extended levels. Old resistance about $10,000 is now good bitcoin support.”