29 Sep 2023 Marsha Tusk
Bitcoin May Turn Out To Be A Better Option Than Bonds
According to Jamie Coutts, a cryptocurrency market analyst at Bloomberg Intelligence, investors will soon begin switching their traditional bond investments to Bitcoin (BTC) because of one key feature.
According to the analyst, there is a connection between the US economy and Bitcoin. According to him, when compared to the weakening of the US dollar, Bitcoin performs better than bonds. The performance of bonds and other assets, such as Bitcoin, was compared to the US "M2" money supply, which consists of consumer-accessible cash, personal savings, and market accounts. The following was said by the analyst:
“In the years ahead it’s conceivable that allocators begin to shift towards better debasement hedges. BTC is an obvious choice. We can see a scenario in the coming years when Bitcoin begins to infiltrate global portfolios at the expense of bonds.”
Source: Bloomberg Intelligence
According to Coutts, Bloomberg Intelligence analysis shows that only 1% of Bitcoin holdings, compared to the traditional 60/40 portfolio (US equities and bonds) as a benchmark, yields a 10.58% (1.32% annualized) return over the backtest period (2015-2022).
“Most notable is the increase in risk-adjusted returns: the Sharpe ratio improves from 0.604 to 0.664 while the maximum drawdown hardly changes. Although an improvement, the 60/39/1 still underperformed the level of M2 debasement over the period by 4%.”
Bitcoin’s price outlook
The price of Bitcoin is steadfastly holding onto its most recent gains as it attempts to reach $27,000 as support before the final Wall Street opening of September.
According to data from Cointelegraph Markets Pro and TradingView, the largest cryptocurrency was seeking to hold gains following a conventional "short squeeze."
The day before, Bitcoin bulls had a chance to reach a top above $27,000 but were unable to do so.
BTC price strength returned to consolidate, peaking at $27,300 on Bitstamp, still up 4% from the week's low at the time of writing.
Popular trader Skew indicated that the upside had come from derivatives markets, with spot traders selling at the highs, after analyzing the situation on low timeframes (LTFs).
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