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Bloomberg Analyst Sees Bitcoin at $50,000 on Anti-Gold Sentiment

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Yashu Gola



A recent meltdown in the Bitcoin price from its record high near $42,000 has done little to shake its bullish bias, at least according to a Bloomberg analyst.

In a report published on Wednesday, senior commodity strategist Mike McGlone wrote that the flagship cryptocurrency could hit $50,000 in the coming sessions. He called out Bitcoin for its ability to hold the $30,000-$40,000 range during its latest pullback move, noting that $30,000, in particular, served as a solid support base to attract institutional investors.

“About $30,000 is the threshold supported by a rising tide of institutional investors and global adoption as a store-of-value,” Mr. McGlone explained. “Our graphic depicts the milestone of the 20-week moving average crossing above $20,000, which we view as an extreme downside level in the event of a risk-off swoon akin to 1Q20.”

Bid Adieu, Gold

As to what brought institutional investors close to Bitcoin, Mr. McGlone highlighted “ample evidence” that showed funds flowing from gold to crypto markets.

Abnormally low-interest rates, rising debt-to-GDP ratio, and global quantitative easing provided strong tailwinds to the Bitcoin price. With its limited supply cap of just 21 million tokens, the cryptocurrency experienced a dramatic spike in its demand as a safe-haven asset.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT

Bitcoin surged by up to 988 percent from its mid-March nadir of $3,858. Source: BTCUSD on TradingView.com

Meanwhile, traditional investors picked gold, whose value also secured a record high in 2020 against inflation fears.

Mr. McGlone noted that institutional investors started gaining exposure in the Bitcoin market via Grayscale Bitcoin Trust. The New York-based fund enabled investors to gain exposure to Bitcoin while avoiding the challenges of buying, storing, and safekeeping it directly.

Capital flowed into the Grayscale’s trust while it kept on accumulating more Bitcoin to back its security offerings. Meanwhile, gold ETFs experienced withdrawals.

“Our [research] depicts accelerating flows into Grayscale Bitcoin Trust (GBTC) as they decline in total known ETF holdings of gold,” said Mr. McGlone. “At almost 700,000 Bitcoins, GBTC is reaching record highs, while gold ETFs have dropped to about 107 million ounces from the October peak, just above 111 million.”

One More Zero to Bitcoin Valuation

Institutional adoption for Bitcoin tends to increase further as its volatility drops to the levels of other traditional markets, such as gold and stocks. Meanwhile, Mr. McGlone stated that the cryptocurrency’s volatility might even plunge below that of the precious metal, making it a more attractive safe-haven asset by 2025.

“Bitcoin 260-day volatility [is] in early bottoming days from an all-time low vs. the same gold measure, akin to the start of 2017,” he added, stating that the cryptocurrency might add one more zero against gold.



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Bitcoin (BTC/USD) Signals Falling Wedge Breakout to Retest $58,000

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Yashu Gola



Bitcoin opened this week in positive territories, looking to recapture its record high levels after crashing to its three-week lows in the previous session.

The benchmark cryptocurrency was up 4.70 percent ahead of the London morning bell, hitting an intraday high shy of $47,500 after bouncing off its 200-4H simple moving average wave. Its sharp pullback also helped it broke above a descending trendline resistance that comes as a part of a Falling Wedge pattern.

In retrospect, traders perceive Falling Wedges as bullish reversal patterns that form when an asset slips lower while forming a sequence of lower highs and lower lows. That ends up making two converging trendlines. Traders realize a bullish bias when the asset convincingly breaks the Wedge’s resistance, accompanied by higher volumes.

Bitcoin Above $50,000

On Monday, Bitcoin posted a similar resistance breakout, with its volumes on a four-chart stabilizing alongside. The move upside signaled that the cryptocurrency could post extended gains in the sessions ahead, with levels above $50,000 looking like ideal primary upside targets for bulls.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT

Bitcoin breaks out of the so-called bullish reversal pattern. Source: BTCUSD on TradingView.com

However, a convergence of 50-4H simple moving average (the blue wave) and a resistance horizontal line near $52,170 should test the bitcoin bulls before they attempt to reclaim the ultimate Wedge primary targets above $58,000. Meanwhile, the support area of $43,000-45,500 needs to hold the floor to stop bears from taking control or risks declining BTC/USD rates to lower $40,000s or upper $30,000.

Overall, the early moves upside this week show that bears are losing focus in the short-term, which should help Bitcoin sustain its recovery up until $50,000 in the best-case scenario.

Macro Narrative

Bitcoin’s recovery takes cues from a recovery in US government bonds on Friday and Monday. Meanwhile, the cryptocurrency expects to remain healthy also as US President Joe Biden’s $1.9 trillion stimulus proposal advances through the House of Representatives.

The bill is now in Senate, controlled equally by Democrats and Republicans, with a decisive vote lying with Vice President Kamala Harris, a Democrat. That has vastly improved the likelihood that the bill would become law even if the entire Republican lot votes against it.

Analysts at Ecoinometrics noted that the Federal Reserve holds about $1.5 trillion in its Treasury General Account.

Meanwhile, Treasury Secretary Janet Yellen has clarified that her office plans to spend all the money to stay in course with Mr. Biden’s expansionary plans, which, in addition to the stimulus, also concerns a $1.4 trillion worth of student loan forgiveness and spending another $3 trillion for infrastructure projects.

“That’s all on the table for 2021, and the total is $6.3 trillion that the US Treasury is going to have to find somewhere,” Ecoinometrics stated. “Even if the final number comes lower, it’s still several trillion, way more than what is sitting on the Treasury General Account at the moment.”

“In that environment, I can only see the narrative for Bitcoin as a hedge against the risk of inflation strengthening,” the data analysis portal added.



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Here’s how the Purpose Bitcoin ETF differs from Grayscale’s GBTC Trust

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Cointelegraph By Marcel Pechman

Since 2017, investors have been anxiously awaiting a Bitcoin ETF approval as the existence of such a fund was an important symbol of mass adoption and acceptance from the realm of traditional finance. 

On Feb. 18, the Toronto Stock Exchange hosted the official launch of the Purpose Bitcoin ETF and the fund quickly absorbed more than $333 million in market capitalization in just two days.

Now that the long-awaited Bitcoin ETF is here, investors are curious about how it will compete with Grayscale Investments GBTC fund. On Feb. 17, Ark Investment Management founder and CEO Cathie Wood said the likelihood that U.S. regulators will approve a Bitcoin exchange-traded fund has gone up.

Although exchange-traded funds (ETF) and exchange-traded notes (ETN) sound quite similar, there are fundamental differences in trading, risks, and taxation.

What is an exchange-traded fund?

An ETF is a security type that holds underlying investments such as commodities, stocks, or bonds. It often resembles a mutual fund, as it is pooled and managed by its issuer.

ETFs have become a $7.7 trillion industry, growing by 65% in the last two years alone.

The most recognizable example is the SPY, a fund that tracks the S&P 500 index, currently managed by State Street. Invesco’s QQQ is another EFT that tracks U.S.-based large-capitalization technology companies.

More exotic structures are available, such as the ProShares UltraShort Bloomberg Crude Oil ($SCO). Using derivatives products, this fund aims to offer two times the daily short leverage on oil prices.

What is an exchange-traded note?

Exchange-traded notes (ETN) are similar to an ETF in that trading occurs using traditional brokers. Still, the difference is an ETN is a debt instrument issued by a financial institution. Even if the fund has a redemption program, the credit risk relies entirely on its issuer.

For example, after Lehman Brothers imploded in 2008, it took ETN investors more than a decade to recoup the investment.

On the other hand, buying an ETF gives one direct ownership of its contents, creating different taxation events when holding futures contracts and leveraging positions. Meanwhile, ETNs are taxed exclusively upon sale.

GBTC does not offer conversion or redemption

Grayscale’s Bitcoin Trust Fund (GBTC) is the absolute leader in the cryptocurrency market, with $35 billion in assets under management.

Investment trusts are structured as companies — at least in regulatory form — and are ‘closed-end funds.’ Thus, the number of shares available is limited and the supply and demand for them largely determines their price.

Investment trust funds are regulated by the U.S. Office of the Comptroller of the Currency (OCC), therefore outside the Securities and Exchange Commission (SEC) authority.

GBTC shares cannot easily be created, neither is there an active redemption program in place. This tends to generate significant price discrepancies from its Net Asset Value, which is the underlying BTC fraction represented.

An ETF, on the other hand, allows the market maker to create and redeem shares at will. Therefore, a premium or discount is usually unlikely if enough liquidity is in place.

An ETF instrument is far more acceptable to mutual fund managers and pension funds as it carries much less risk than a closed-ended trust like GBTC. Retail investors may not have been aware of the possibility that GBTC trades below net assets value. Thus the recent event might further pressure investors to move their position to the Canadian ETF.

To sum up, an ETF product carries a significantly less risk due to greater transparency and the possibility to redeem shares in the case of shares trading at a discount.

Nevertheless, the impressive GBTC market capitalization clearly states that institutional investors are already on board.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.