Bitcoin Recovery Tied To M2 Growth And Seller Exhaustion

Sigel noted the correlation between former President Donald Trump’s lead in betting polls against Vice President Kamala Harris and Bitcoin’s rise. He characterized Trump as the most pro-crypto candidate, suggesting that his policies may favor the cryptocurrency market. 

Conversely, Sigel expressed skepticism about Harris’s understanding of Bitcoin, indicating that her administration may not prioritize cryptocurrency issues.

Delving deeper into Bitcoin’s price dynamics, Sigel highlighted several critical correlations. He pointed out a negative correlation with the US dollar and a positive correlation with the global money supply growth, known as M2, leading to the current uptrend. 

Sigel also attributed the recent price recovery to the Federal Reserve’s pivot towards reacceleration of M2 growth, alongside what he described as a current “seller exhaustion” in the BTC market.  

Additionally, Sigel identified a promising bullish setup for Bitcoin as the election approaches, particularly its rising correlation with the Nasdaq, reaching a two-year high of 1.5. 

Sigel recalled a similar pattern from the 2020 elections, where Bitcoin exhibited low volatility until the election outcome was announced, leading to a substantial rally as new buyers flooded the market. “New buyers are born every day,â€?he emphasized, indicating a steady influx of interest in Bitcoin.

When discussing Bitcoin’s relationship with gold and M2, Sigel described Bitcoin as a “chameleon,” highlighting its dynamic correlations that can shift over time. This variability makes it challenging to accurately predict Bitcoin’s short- and long-term behaviors.

$180,000 Post-Election, $3 Million By 2050

In addition to US political dynamics, Sigel pointed to recent activities within the BRICS intergovernmental organization, particularly the involvement of new members Argentina, the UAE, and Ethiopia in Bitcoin mining. 

The researcher noted that these countries are leveraging government resources to mine Bitcoin to counter what he termed the “irresponsible” fiscal policies of the US. 

Sigel also mentioned Russia’s plans for its sovereign wealth fund to invest in Bitcoin mining through BRICS, proposing settling global trade in Bitcoin.

When asked about potential future price points for BTC, Sigel explained that historical rallies have seen increases of around 2,000%. If Bitcoin were to achieve half of that rise post-election, it could reach approximately $180,000. 

Looking further ahead, Sigel referenced a model from VanEck’s digital asset research team, predicting that by 2050, Bitcoin could serve as a reserve asset for global trade, held by central banks at a rate of 2%. This model suggests a staggering $3 million per Bitcoin price by that year.

At the time of writing, BTC is trading at $68,900, up 1.7% over the past 24 hours. 

Featured image from DALL-E, chart from TradingView.com 

$70,000 As Key Level For Bitcoin To Surpass March Record

The recent uptick in Bitcoin’s price has been bolstered by a rally in the stock market, with analysts noting that investors are increasingly pricing in a potential Trump victory. 

Tony Sycamore, a market analyst at IG Australia Pty, indicated that Bitcoin needs to maintain a solid break past $70,000 to build confidence in surpassing its previous record of $73,798 set in March.

Trump has positioned himself as a pro-crypto candidate, pledging to make the US the cryptocurrency capital of the world. In contrast, Harris has taken a more cautious stance, advocating for a regulatory framework for the industry. 

Amidst the political backdrop, options traders have ramped up their bets, with many speculating that Bitcoin could reach $80,000 by the end of November, irrespective of who wins the election. 

Implied volatility around Election Day on November 5 has also risen, reflecting the uncertainty in the market. Notably, spot Bitcoin ETFs in the US have seen approximately $3.1 billion in net inflows this month, further contributing to the positive sentiment surrounding cryptocurrencies.

Regulatory Concerns Surround Harris’s Stance On Crypto

Crypto analyst VirtualBacon recently highlighted the significance of the upcoming election for the cryptocurrency market, dubbing it the “Crypto Election.”Â?/p>

Prediction markets currently favor Trump at 60%, although these figures may be skewed due to the crypto community’s historical support for him. National polls indicate a tighter race, with Harris holding a slight lead of just over 1%. 

The crypto industry has contributed approximately $119 million to campaigns this election year, representing nearly half of all corporate donations. 

However, major players like Coinbase and Ripple are strategically donating across party lines to promote supportive legislation rather than backing a single candidate.

While both Trump and Harris have publicly expressed favorable views on cryptocurrency, their commitments to concrete legislative action remain uncertain. 

Harris’s regulatory approach raises concerns, as her campaign has emphasized protecting minority investors in digital assets without providing specifics. 

Moreover, her tenure as Vice President coincided with the appointments of prominent crypto critics such as the US Securities and Exchange Commission (SEC) chair Gary Gensler, and US Treasury Secretary Janet Yellen.

On the other hand, Trump’s evolving views towards cryptocurrency, including the launch of a successful NFT project and a DeFi platform, suggest a warming to the industry. 

As the election approaches, VirtualBacon suggests that it’s crucial to consider that economic data released post-election will significantly influence market sentiment. 

The upcoming Federal Open Market Committee (FOMC) meeting in November could provide critical insights into inflation and liquidity, impacting both the broader market and the trajectory of cryptocurrencies.

Despite the speculation surrounding the impact of the presidential election, which is just 7 days away, another analyst, Ali Martinez, noted that over the past eleven years, seven of them have seen massive gains for the market’s leading crypto.

As can be seen in the chart provided by Martinez, the average November gain for BTC is a massive 46%, which if the market follows these late patterns, could see a November price of just over $100,000 per coin.

However, for BTC to confirm a breakout to retest its all-time high, it will be key for it to consolidate above the $70,000 mark in the coming days ahead of the election, positioning it well for a dramatic breakout to even higher prices. 

Featured image from DALL-E, chart from TradingView.com

Krueger began his analysis by acknowledging the prevalent skepticism in the market. “There’s all this paper Bitcoin, and ETFs don’t really have the Bitcoin, and if they were buying all this Bitcoin, how come Bitcoin price is not higher?” he stated, encapsulating the core concerns of many investors.

Historically, the concept of “paper Bitcoin” has been associated with exchanges that sold Bitcoin to customers without actually possessing the underlying assets. Krueger highlighted several high-profile instances where this practice led to significant losses for investors. He cited the case of Mt. Gox.

Another example he provided was QuadrigaCX, a Canadian exchange that collapsed under mysterious circumstances. Founder Gerald Cotten allegedly died in India, taking with him the private keys to the exchange’s cold wallets, effectively locking away customer funds. “A lot of Canadians lost all their Bitcoin on this Quad exchange,” Krueger noted.

Are “ETF Paper Bitcoin” Real?

These historical events have contributed to the current apprehension about ETFs and the possibility that they might be engaging in similar practices—selling Bitcoin they do not actually hold, thereby suppressing BTC’s price through artificial supply. However, Krueger argued that ETFs, particularly those managed by established financial institutions, operate under a fundamentally different framework compared to unregulated exchanges.

Focusing on two leading ETFs—IBIT, the BlackRock ETF, and FBTC, the Fidelity ETF—Krueger emphasized the stringent regulatory oversight governing these entities. “Both of these ETFs are subject to very strict regulatory oversight, including the SEC but also other agencies in the US,” he stated. This comprehensive oversight includes requirements for complete transparency, regular audits, and the use of third-party custodians for asset verification. “They literally have to get a receipt of an asset from a third-party custodian,” Krueger added.

In the case of IBIT, Coinbase serves as the third-party custodian. “Coinbase is itself a public company that is audited,” Krueger pointed out, noting that the public nature of Coinbase adds an additional layer of scrutiny and accountability. IBIT conducts audits of Coinbase, and both entities are subject to audits by the SEC and other regulatory bodies. For FBTC, custody is handled by Fidelity Digital Assets, a separate entity within Fidelity that specializes in the custody of digital assets, thereby ensuring specialized oversight and management.

“The issuers of IBIT and FBTC are BlackRock and Fidelity, two of the largest and oldest financial institutions, and they have a vested interest in maintaining their reputation,” Krueger asserted. “Their reputation is at stake, and this is a big deal,” he emphasized, suggesting that these institutions would not risk their credibility by engaging in the sale of non-existent Bitcoin.

Krueger contrasted BlackRock with entities like QuadrigaCX to underscore the disparity in regulatory compliance and operational scale. “BlackRock is highly regulated […] BlackRock has a robust corporate governance structure with committees for audit, risk, and compliance and very extensive internal controls,” Krueger added.

Addressing the core concern about ETFs holding “paper Bitcoin,” Krueger provided specific data to refute this notion. “The reality is the ETFs have zero pure paper Bitcoin,” he stated unequivocally. He highlighted that IBIT holds approximately 403,000 actual Bitcoins, while FBTC holds about 185,000 actual Bitcoins. “Together, these two ETFs hold almost 3% of the world’s total Bitcoin, or 588,000 Bitcoins—I think it’s 2.9%,” he calculated.

Krueger acknowledged that some skeptics have attempted to analyze Bitcoin movement between specific dates to challenge these holdings. However, he emphasized that the facts are clear and verifiable. “We know how much Bitcoin these ETFs have; we know that it’s accounted for, and that’s a reality,” he insisted.

Turning to the question of why Bitcoin’s price has not increased more dramatically despite significant ETF inflows, Krueger offered a nuanced explanation. He noted that Bitcoin is, in fact, up by 60% since the introduction of the ETFs, translating to a $600 billion increase in market capitalization. This growth has been fueled by approximately $20 billion in net inflows into the ETFs, resulting in a price multiplier effect of about 30x. “That’s historically about normal, maybe a little on the low side but not terribly so,” he assessed.

Krueger attributed the moderation in Bitcoin’s price growth to substantial selling pressures from various sources. “There’s been a bunch of selling,” he explained. He detailed that Germany sold $3 billion worth of Bitcoin as well as Mt. Gox holdings. Additionally, FTX sold its GBTC (Grayscale Bitcoin Trust) stake earlier in the year, and the Digital Currency Group (DCG) sold assets to resolve lawsuits. “We had a lot of selling,” Krueger summarized.

Speculating on the potential impact absent these selling pressures, Krueger suggested that Bitcoin’s price could have been significantly higher. “We probably would be at $90k if there wasn’t any selling,” he posited.

At press time, BTC traded at $68,752.

‘Bird Beakâ€?Pattern Signals Path To $100,000

Optimism in the crypto community is soaring as a popular crypto analyst, ‘Trader Tardigradeâ€?has shared a bullish prediction for Bitcoin’s price outlook. In an X (formerly Twitter) post, the analyst uncovered a distinct technical pattern known as the “Bird Beak signâ€?in the Bitcoin Heikin AshiBitcoin Heikin Ashi chart, which is a type of candlestick chart used to spot market trend direction and predict future prices. 

The Bird Beak Sign is a distinct chart pattern that resembles a beak and is created when the Heikin Ashi candlesticks cluster together in a tight consolidated range. Typically when a cryptocurrency consolidates, it means that its price is stabilizing before a potential rally upwards. In the case of Bitcoin, the recent Bird Beak pattern suggests consolidation is preceding an upward momentum. 

The analyst notes that in the past when Bitcoin showed the Bird Beak sign on the daily Heikin Ashi chart, it was followed by a strong uptrend. This upward movement was represented by multiple green candles, which showed upward movement. 

Sharing a price chart, Trader Tardigrade disclosed that on 2nd January 2023, a Bird Beak sign had appeared in the Bitcoin chart, triggering a price surge to $23,250 at the time. This same chart pattern was also observed on the 7th and 25th of February, 2024, with Bitcoin skyrocketing to $52,000 and reaching between $71,000 to $72,000, respectively.  

Trader Tardigrade has revealed that the present Bird Beak sign seen in Bitcoin’s Heikin Ashi chart formed on 27 October 2024. Based on these past signs, analysts have predicted that the new Bird Beak pattern could lead to another sharp increase for Bitcoin, potentially pushing its price to $114,000 this month. 

Analyst Expects Bitcoin Price To Hit $71,000 First

In a more recent X post, Trader Tardigrade revealed that Bitcoin was breaking out of a Symmetrical Triangle at the tip of its 8-hour Heikin Ashi chart.  Based on this new symmetrical triangle pattern, the analyst forecasts that a successful breakout could lead to a rally towards the $71,000 price target for Bitcoin. 

This bullish sentiment is shared by another popular analyst known as the ‘Titan of Crypto,â€?who also projects Bitcoin’s next target at $71,000. This analyst has predicted that Bitcoin will reach this new target before the month closes, highlighting that the cryptocurrency’s monthly candle is looking significantly strong.

It’s important to note that as of writing, the price of Bitcoin is trading at $67,856, marking a 1.3% increase in the past 24 hours, according to CoinMarketCap. 

Speaking of sustained rally, the Bitcoin Stock-to-Flow model is pointing to an interesting trend in the long-term outlook for Bitcoin. Particularly, crypto analyst Plan B made reference to the Stock-to-Flow model to suggest that BTC is ready for the next phase transition.

BTC Is Ready For Next Phase Transition

The Bitcoin Stock-to-Flow (S2F) model is drawing attention as it signals that Bitcoin may be gearing up for a new phase transition that would solidify its price above $100,000.  The S2F model, originally developed for commodities like gold and silver, measures an asset’s existing supply against the rate of new units entering the market. In the case of BTC, the S2F model calculates scarcity by taking its fixed supply of 21 million BTC into account, along with the block reward halvings that reduce new supply every four years. 

Each halving event decreases the issuance rate, creating an increasing scarcity that the model correlates with price growth. According to the S2F chart shared by Plan B, these halvings have led to price increases in the months after, with the S2F model accurately forecasting Bitcoin’s transitions into new price levels. 

Bitcoin last halved in April 2024, resulting in the block reward slashing from 6.25 BTC to 3.125 BTC. According to the S2F chart, past Bitcoin halvings have always started the price transition into a new phase. The 2020 halving, for example, kickstarted the transition into a new phase above $10,000 that culminated in BTC reaching the previous all-time high of around $66,000. 

Now that the April 2024 halving is six months behind us, the effects of the halving are starting to be factored into the supply and demand of Bitcoin. As such, Bitcoin is looking prime for a phase transition above $100,000.

What Does This Mean For Bitcoin Price?

As past phase transitions have played out, a phase transition above $100,000 would solidify the Bitcoin price above this level. With the $100,000 price level now serving as a price floor, this would give the Bitcoin price the support to keep increasing in the months after. 

Previous phase transitions have always led to a new peak before another halving. The anticipated peak for this phase is just below $1,000,000. If past trends hold true, the Bitcoin price could reach this impressive milestone ahead of the next halving, which is expected to take place in 2028.

At the time of writing, Bitcoin is trading at $68,340.

Analyst Ali Martinez has shared significant data from Binance, highlighting the high risk for short positions at the $68,500 mark. When such risk levels are present, the price often seeks liquidity, which suggests that it may gravitate toward supply zones. This behavior indicates that the market is potentially targeting areas where sellers may be positioned, which could lead to further fluctuations in price.

The interplay between these resistance and support levels will determine Bitcoin’s trajectory. A decisive move above these levels could signal Bitcoin’s next phase, making it critical for investors to remain vigilant.

Bitcoin Short Squeeze Looms

Bitcoin is reaching a pivotal moment, with the market buzzing with expectations for a potential push toward all-time highs. Martinez recently shared crucial data on X, revealing that a significant number of short positions are at risk of liquidation, particularly around the $68,598 mark. The cumulative short liquidation leverage at this price level is approximately $452.36 million, indicating that a substantial amount of capital could be affected if the price continues to rise.

This scenario sets the stage for a bullish outlook, as overleveraged short positions suggest that Bitcoin could find liquidity at supply levels. This could trigger a cascade of buying pressure. When the price breaks above the key $69,000 mark, it could lead to a wave of Fear of Missing Out (FOMO) among traders and investors watching from the sidelines.

The liquidation of these short positions could propel Bitcoin’s price higher, strengthening the bullish narrative. Market participants closely monitor this critical threshold, as a decisive break above $69,000 could ignite a surge toward previously untested highs.

Maintaining awareness of both market dynamics and key price levels is essential for traders looking to navigate the volatility. The next few days could prove crucial as Bitcoin approaches this significant moment, and how it reacts to these overleveraged positions may determine its trajectory in the coming weeks.

BTC Liquidity Levels

Bitcoin (BTC) is currently trading at $67,100 after a week marked by volatility and uncertainty. The price has pushed above the $66,000 level, signaling strength and hinting at a potential rally in the coming weeks. This upward movement reflects renewed optimism in the market, as investors look for signs of sustained bullish momentum.

However, it’s essential for BTC to maintain its position above the $65,000 mark. If the price fails to hold this level, a sideways consolidation may occur, allowing the market to gather liquidity before making its next move. This consolidation phase could set the stage for a surge in buying activity as traders look to capitalize on potential opportunities.

A break above the key $70,000 level would further strengthen the bullish outlook, potentially initiating a new uptrend. Such a movement could attract additional investment and excitement in the market, as traders and investors respond to the breakout. 

Featured image from Dall-E, chart from TradingView

Technical Pattern Signals $200,000 Rally Ahead

Popular crypto analyst, Mags has unveiled a new technical pattern in the Bitcoin price chart. According to his post on X (formerly Twitter), Bitcoin is currently forming “a massive cup and handle pattern,â€?indicating a potential for a major rally. 

Mags revealed that the Bitcoin price has just moved past the handle portion in the technical pattern, indicating a positive signal for a breakout that could start a bullish phase. As its name suggests, a Cup and Handle pattern is a key technical chart pattern that resembles a cup and handle. In this chart pattern, the cup is in the shape of a U and is considered a bullish signal, while the handle represents a slight downward drift, which indicates a potential buying opportunity to go long. 

Mags observed that since Bitcoin has just broken past the handle, the next level is to watch the “necklineâ€?which serves as a resistance point. If Bitcoin can break through the neckline, it’s price could surge dramatically or like the analyst says “go vertical.â€?This bull rally could see Bitcoin’s price driving towards $200,000, marking a new all time high for the cryptocurrency.

Currently, the price of Bitcoin is trading at $66,972, reflecting a slight 2.02% decrease in the past seven days, according to CoinMarketCap. While Mags has projected a $200,000 price increase for Bitcoin, the analyst has also forecasted even higher price targets in previous X posts, suggesting that a $200,000 price level may be conservative for the world’s first and largest cryptocurrency. 

Bitcoin Price Peak Set At $300,000

In another X post on October 24, Mags disclosed that Bitcoin is about to enter its price discovery, suggesting an imminent breakout to new levels. Price discovery is the process by which an asset’s true market value is determined, and for Bitcoin, it suggests when its price could reach fresh highs.  

Sharing a historical Bitcoin price chart, the analyst pinpointed instances where the cryptocurrency entered a price discovery before reaching a peak. In 2014, BTC hit a peak, then bottomed out in 2015 before reaching another price high in 2018. A similar price action occurred between 2019 and 2024, with BTC achieving a bottom in 2019 and peaking in 2021. 

Following this historical price trend, Mags indicated that Bitcoin hit its bottom in 2023 and is now about to enter its price discovery. Once the cryptocurrency does, it could signal a surge to a new all-time high, which Mags has set at an impressive $300,000. 

According to CryptoQuant data, there’s still room for further growth, as short-term holder (STH) coins are trading at a 6.2% net asset value (NAV) premium. This premium is often viewed as a gauge of market sentiment, reflecting the optimism of short-term holders who are willing to pay above the current market value to acquire Bitcoin. A higher NAV premium generally suggests that investors expect continued price appreciation and are positioning themselves for future gains.

As BTC stabilizes in its current range, all eyes are on the $70,000 mark as a potential breakout level that could pave the way for a fresh rally. With positive market sentiment and supportive data, Bitcoin’s outlook for the coming weeks remains encouraging, fueled by both technical signals and strong buyer interest.

Retail Buying Bitcoin (Again)

Bitcoin is experiencing growing demand from short-term holders as its price consolidates below key supply levels, close to all-time highs. Analyst Axler Adler recently shared critical insights on X, showing that Bitcoin’s net asset value (NAV) premium among short-term holders has climbed to 6.2%.

This 6.2% NAV premium indicates that Bitcoin’s current market price is trading 6.2% above the average acquisition cost for short-term holders. Essentially, these investors are valuing Bitcoin at a premium, suggesting optimism about the potential for further gains. 

Adler explains that this metric acts as a bullish signal, highlighting room for continued price growth. An NAV premium of 25% or higher typically points to an overheated market, implying that demand has yet to reach excessive levels.

According to Adler’s analysis, the NAV premium is an important gauge of market sentiment. A moderate premium like 6.2% reflects healthy demand among short-term holders, aligning with an accumulation phase rather than a peak. This is especially relevant as Bitcoin’s price consolidates under significant resistance levels, potentially setting the stage for a breakout. 

Bitcoin’s consolidation below its key supply levels and rising demand among short-term holders reflects a favorable environment for potential price appreciation. If short-term holder demand continues to grow, it could fuel BTC’s ascent to new highs.

The balance between premium demand and manageable NAV levels could signal sustained upward momentum. There is a potential rally on the horizon if buying pressure strengthens at current levels.

Technical Level To Watch 

Bitcoin is trading at $66,900 after establishing solid support around $65,000. The price action signals resilience as it consolidates above this crucial level. This support around $65,000 marks a significant pivot, as holding above it reflects underlying strength and fuels optimism among investors. However, for Bitcoin to keep bullish momentum, a push above $70,000 is essential to confirm the uptrend.

If Bitcoin loses the $65,000 level, analysts foresee a retrace toward the 200-day moving average (MA) at $63,274. This level is relevant as a long-term support zone. A pullback to this area could attract new buyers, reinforcing it as a major support if tested.

Investors view the 200-day MA as a key anchor for Bitcoin’s bullish structure. If BTC can hold above $65,000 and eventually break $70,000, it would indicate a continuation of the current bullish phase. Conversely, a dip below these supports would shift focus to the 200-day MA. Holding above this moving average is crucial to prevent a bearish reversal.

Featured image from Dall-E, chart from TradingView

Here’s How High An Analyst Project’s Bitcoin’s Next Price

Popular crypto analyst, Javon Marks revealed in an X (formerly Twitter) post on Thursday that Bitcoin’s recent price movements were signaling an impending bull rally. The analyst observed that Bitcoin’s current market conditions resemble past patterns and trends. 

Marks presented a detailed chart depicting Bitcoin’s price action from 2023 till date. The analyst noted that the Bitcoin price had formed a Hidden Bull Divergence pattern in 2023, spanning from February to November. Similarly, the cryptocurrency is currently developing another Hidden Bullish Divergence pattern, beginning at the start of the beginning of the year and appearing to extend towards year-end. 

Based on these parallel price movements, Marks suggests that Bitcoin is poised for a significant rally to new highs soon. The analyst projects that Bitcoin’s next target is presently 70% above its current price, with the potential to surge as high as $116,652 as it experiences one of the most explosive bull waves ever seen. 

From Mark’s X post, it can be seen that the analyst has consistently projected the $116,600 price target for Bitcoin. His earliest Bitcoin prediction of this all-time high was on September 12, when he claimed that Bitcoin’s rise to over $116,600 was still 100% away. 

Mark’s unwavering confidence in this price target suggests a strong conviction that Bitcoin is poised to reach a new ATH this cycle. Currently, the price of Bitcoin is trading at $67,601, marking a 1.31% increase in the last 24 hours and a 5.86% increase over the past month, according to CoinMarketCap. 

Bitcoin Price Could Jump Even Higher Than $116,000

Another well-known crypto analyst, identified as ‘Yoddhaâ€?on X has presented a Bitcoin price chart highlighting its next bullish price target. With a caption that reads: “When in doubt, zoom out,â€?the analyst has expressed his confidence that Bitcoin is set to skyrocket this season.

In the price chart, the analyst pinpointed his next target for Bitcoin, indicating that the cryptocurrency could see its price soaring between $130,000 to $170,000. This price surge is expected to occur around 2025 when the bull market is fully underway. 

Conversely, Elja, a market expert on X, has projected a more conservative price target for Bitcoin, expecting the cryptocurrency to soar to a new ATH of around $94,000. However, the analyst believes that this massive price breakout will begin in October. 

Authored by Dr. Matthew Ferranti, a Harvard-trained economist and former member of the White House Council of Economic Advisers, presents several compelling arguments for why central banks might consider adding Bitcoin to their portfolios.

Bitcoin As A Modern Reserve Asset 

Dr. Ferranti begins by noting the trend of central banks increasing their gold reserves, suggesting that Bitcoin could serve as a modern counterpart. 

While only one central bank—the Central Bank of El Salvador—has publicly disclosed Bitcoin holdings, Dr. Ferranti highlights that Bitcoin represents just under 10% of El Salvador’s reserves. He argues that an optimal allocation would fall between 2% and 5%, allowing for diversification without excessive risk.

One of the key points raised in the report is Bitcoin’s historical performance during economic crises. Dr. Ferranti argues that a crucial feature of any reserve asset is its ability to provide returns when traditional assets falter. 

The report cites examples such as the financial turmoil surrounding the collapse of Silicon Valley Bank in 2023 and the US sanctions on Russia following its invasion of Ukraine in 2022, both of which corresponded with significant spikes in Bitcoin’s value.

Despite Bitcoin’s short-term volatility, Dr. Ferranti posits that it has the potential to outperform traditional assets over longer periods. He attributes this to Bitcoin’s Halving cycle, which reduces the rate of new coin production and can lead to price increases. 

Furthermore, the economist notes that both Bitcoin and gold perform well during inflationary periods, suggesting that rising Bitcoin prices might indicate forthcoming inflation.

No Default Risk And Immunity To Financial Sanctions

The report also references findings from the Federal Reserve Bank of New York, which indicate that Bitcoin’s price is largely unaffected by macroeconomic news, except for inflation-related information. 

This quality, the doctor says, makes Bitcoin an effective diversifier within a portfolio, especially given its low correlation with traditional reserve assets such as gold and foreign currencies.

Dr. Ferranti outlines three reasons why Bitcoin is devoid of default risk. First, the doctor contends that it does not represent a claim on future cash flows, unlike stocks and bonds. 

Second, the network is secured through a robust mining process. Lastly, Bitcoin is immune to financial sanctions—an important consideration for central banks—since it cannot be “frozen” in the same way traditional assets can be.

While acknowledging that Bitcoin does not match the liquidity of the US Treasury market, Dr. Ferranti points out that its liquidity has improved significantly, with a current market cap exceeding $1.3 trillion. 

The economist concludes by suggesting that this level of liquidity is adequate for accommodating large transactions, making Bitcoin a more attractive option than in previous years for central banks worldwide.

At the time of writing, the largest cryptocurrency on the market is trading at $67,500, down 1.5% in the 24-hour time frame. 

Featured image from DALL-E, chart from TradingView.com