Bloomberg: Bitcoin will either go to zero or $500,000

Bloomberg analyst Mike McGlone shared his analysis of the current Bitcoin market trends on Thursday.

He said that Bitcoin is at the beginning of a bull market with the support of gold. Although the current performance of the crypto asset market is somewhat like 2017, the foundation of the asset is becoming solid due to the development of decentralized exchanges (DEX) and decentralized finance (DeFi). Limited supply and growing demand are the bottom line of Bitcoin. Macroeconomic fundamentals support its market value towards gold. By then, the price of Bitcoin may reach $500,000, but if it fails, the price of Bitcoin may also return to zero.

McGlone believes that the decline in Bitcoin’s price volatility, especially compared to stocks and gold, is a sign that Bitcoin is gaining the upper hand.

He noted that Bitcoin’s price should continue to rise for macroeconomic reasons, as fundamentally and technically, Bitcoin’s recovery is on solid ground, but the rest of the cryptocurrency market seems to be more affected by speculative excesses.

McGlone said that Bitcoin has won the competition among cryptocurrencies and is gradually maturing into digital gold, with the annual correlation between Bitcoin and gold reaching as high as 0.77.

He believes that Bitcoin's low volatility relative to the Nasdaq index shows that the cryptocurrency is maturing. Since the market crash in March, Bitcoin's volatility has been declining while stock market volatility has been rising, indicating that the risk of the stock market is rising while the risk of Bitcoin is falling.

As for other cryptocurrencies, McGlone believes that Ethereum is at greater risk of a pullback, while the largest stablecoin Tether is expected to become the second largest cryptocurrency by market capitalization next year.

He also mentioned that the massive inflows into the Grayscale Bitcoin Trust (GBTC) indicate that demand for Bitcoin is increasing and that Bitcoin is gradually becoming a mainstream investable asset. The total assets of the GBTC fund are currently about 450,000 Bitcoins ($5.1 billion), about double what they were a year ago.

Over the past year, GBTC has absorbed about a third of new Bitcoin supply. If the pace of inflows does not slow, absorption will be close to 50%, reducing supply. GBTC is by far the largest regulated exchange crypto asset product and usually trades at a higher price.