Ryze Recap 7/7: Bloomberg's Mid-Year Bitcoin Outlook

It’s Tuesday, July 7th. We hope you had a great 4th of July weekend.

If you’re new here, Ryze Recaps is a newsletter covering the top stories that Bitcoiners need to know in 2 minutes or less.

We’ve got one main story for you today.

Bloomberg’s Mid-Year Outlook on Bitcoin is Bullish

At the start of June, we covered Bloomberg Intelligence’s favorable perspective on Bitcoin. In that report, Bloomberg compared Bitcoin to gold, paying extra attention to rising institutional interest in Bitcoin.

Now, Bloomberg has released it’s mid-year outlook on Bitcoin and has extended the narrative laid out in the first report.

The highlights:

  • Favorable Macroeconomic Conditions: “Unparalleled global central-bank easing and rising gold values are enduring trends favoring a higher Bitcoin price.” Bloomberg likens Bitcoin to gold, highlighting its role as a store of value in a potentially inflationary macroeconomic environment. For more, read our report on central bank money printing and Bitcoin.

  • Institutional Interest: Citing consistent record-breaking inflows into GBTC (Grayscale’s Bitcoin Investment Trust), along with high open interest in Bitcoin derivatives markets, Bloomberg contends that Bitcoin is becoming a more mainstream asset class among money managers such as hedge funds and family offices.

  • Volatility and Risk: “Annual Bitcoin volatility is at record lows vs. equities, gold and commodities' crude-oil kin, indicating the crypto is maturing on a risk-adjusted basis.” Lower volatility makes an asset more appealing to lower-risk investors.

Why it matters:

  • A favorable macroeconomic environment coupled with decreased volatility and risk may be what’s causing an increase in institutional interest. Investors see Bitcoin as digital gold during times of economic uncertainty. Decreased volatility, especially when compared to the rest of the crypto market, de-risks Bitcoin as an investment for large institutional players. Increased institutional demand will likely equate to long-term price appreciation.

  • While media outlets and Twitter personalities within the industry are raving about DeFi (decentralized finance) projects being built on Ethereum, institutional players are laser-focused on Bitcoin— the most proven and valuable crypto-asset. Bloomberg expects Bitcoin to continue outperforming the broader market, writing, “Too much supply and ease of entry should continue to weigh on most alt-coins,” and even referring to altcoins as a “gaggle of copycats.”

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A few more quick things

Bitcoin by the Numbers: More than $180 Billion in value was transacted on the Bitcoin network in the second quarter of 2020, averaging at just under $2 Billion per day, just a little higher than Q1 transaction volume. Transaction fees increased 136% in the last quarter, an indication of higher network usage. Fees peaked just before the May 11th Halving, but have since decreased significantly.

Bitcoin Coming to UK Institutions: Last week, we reported that crypto ownership is up 73% in the UK since last year, and Binance has set up a separate exchange there to better serve UK consumers. Now, Kraken, another global exchange, is making strides towards servicing UK-based institutional investors. It’s subsidiary, Kraken Futures, has secured a key regulatory license that allows it to offer derivatives products to investors who can only trade on regulated platforms. It’s the first such license granted by the UK to a crypto firm.

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That’s all for today! We’ll be back again with another Ryze Recap.

Written by Ryze Financial— helping you understand and invest in Bitcoin, on your own terms.