In a digital report, Bloomberg praised Bitcoin’s performance and its multiple economic benefits compared to gold, emphasizing that the token has not been in the same position as traditional markets during this crisis. Bloomberg also noted that Bitcoin has been losing the high volatility that has been associated with it.
The 2020 “Bitcoin Maturity Leap” report shows why Bitcoin stands out from the rest of Cryptos and could become a quasi-currency like gold in 2020, as a consequence of the current financial crisis —driven by COVID-19 —which has shaken stock market prices, causing higher volatility than ever before.
Bitcoin was born out of a financial crisis, so it knows how to overcome it and stay afloat. Bloomberg explains that unlike the S&P 500, bitcoin prices are not falling dramatically, so bitcoin is in a “transition toward gold-like adoption, maturity, and performance”.
“Despite Bitcoin annualized volatility that’s averaged about 5x that of the S&P 500 in the past year, the crypto is down only about 5% in 2020 vs. almost 22% for the stock index.”
Bitcoin’s Gold-Like Transition
In the report, Bitcoin is often compared to gold. The analysts at Bloomberg believe that soon the most important cryptocurrency in the ecosystem may cease to be considered a “risk-on speculative asset” and be treated as a “version of gold” after an economic transition where bitcoin and gold go bullish while S&P 500 goes bearish.
“Bitcoin’s maturation process from speculative appreciation toward a store-of-value mechanism akin to gold should continue….Bitcoin’s correlation to gold has increased to all-time highs. Unprecedented quantitative easing supports quasi currencies.”
Moreover, Bloomberg highlighted as another sign of market maturity the fact that, on a one-year basis, “Bitcoin is up about 40% vs. a 15% decline for the S&P 500.”
“The swiftest stock-market decline in a generation has pressured Bitcoin back to its most widely traded price area since the inception of futures, just below $7,000.”
‘Stock-market volatility tilts please toward Bitcoin’
Bitcoin has been recovering well from the traditional markets during this economic crisis — known as the “stock market crash of 2020”— which began in late February and intensified in March, following the oil price war between Russia and Saudi Arabia, catalyzed by the COVID-19 pandemic.
“The first-born crypto is still susceptible to the receding stock-market tide, but is more of a bullish divergent condition, Bitcoin remains up about 9% in 2020 and is hovering near its $8,000 support level, despite about a 20% S&P 500 correction. Our graphic depicts the spiking nature of the correlation between Bitcoin and the S&P 500, notably when equities decline swiftly.”
During the last few years, bitcoin has proven to be a good investment, but is it enough for it to replace fiat? It is hard to say but it seems like Bloomberg is optimistic about it. For now, BTC is doing very well compared to the stock market, attracting more and more investors and enthusiasts to the ecosystem… And that is another sign of maturity.