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A New Bitcoin Supercycle Could Be Emerging Says Analyst

Author

Jonathan Gibson

Tags

Reading time

3 mins
Last update

Author

Jonathan Gibson

Tags

Reading time

3 mins
Last update

Author

Jonathan Gibson

Tags

Reading time

3 mins
Last update

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There could be a new Bitcoin supercycle emerging according to Bloomberg Intelligence Senior Macro Strategist Mike McGlone. McGlone wrote on Twitter that Bitcoin has outperformed commodities and it has also beaten gold. His comments come at a moment in which there is an ongoing banking crisis in the United States that affected other banks such as Credit Suisse. 

Bitcoin Supercycle Could be Emerging

According to Mike McGlone, Bitcoin is outperforming commodities with declining risk. Additionally, he wrote on Twitter that the largest cryptocurrency is also beating gold by almost 10x, which may be indicative of a super cycle happening in the crypto industry. 

About it, he wrote on Twitter:

“Looking for a super cycle? Bitcoin Outperforms #Commodities With Declining Risk – #Bitcoin beating #gold, the top-performing old-guard commodity in 2023 to March 20, by almost 10x may be indicative of a super cycle happening in the #crypto.”

It is also worth taking into consideration that McGlone has also noted that Bitcoin (BTC) is experiencing decreasing volatility, which is something positive, considering that Bitcoin has been always considered a volatile asset. Furthermore, he mentioned that if the past trend holds, it is possible to see crypto’s volatility recover vs commodities when Bitcoin heads towards new highs. 

Finally, he closed his analysis by explaining that the current banking crisis and issues with fractional reserves might be creating a new opportunity for Bitcoin to show its attributes. Let’s not forget that there are 21 million BTC and that there will be no more BTC printed in the future. 

At the moment, the issuance of new BTC is capped at 6.25 BTC per block, close to 900 BTC per day. The next Bitcoin halving event is going to take place in mid-2024. That means that the new issuance of Bitcoin will be reduced by 50% to 450 BTC per day, or 3.125 BTC per block. This is in contrast to the current banking system that relies on fractional deposits and funds held at banks. 

A few days ago, UBS struck a deal to purchase Credit Suisse for $3.2 billion. This comes as fears about bank solvency issues expand all over the world, especially in the United States and Europe. In recent days, however, we have seen several governments make sure that they will take all the necessary measures to avoid any contagion effect that could affect banks. 

Inflation Grows, Banks Suffer, Bitcoin Expands

According to data shared by CoinGecko, Bitcoin expanded by 2.1% in the last 24 hours, registering gains of over 15% in the last 7 days alone. The price of the largest cryptocurrency at the time of writing this article stands at $28,780 and it has a market capitalization of $550 billion. 

There could be multiple factors why Bitcoin could start a new supercycle. One of the things that could have an impact on the price of Bitcoin in the long term is related to the increasing interest from institutional investors to get access to virtual currencies, especially BTC. The last years have been very important for institutions to start entering the market and for companies to build new solutions for these large investors. 

Nevertheless, there are many things that should be addressed in order for institutions to enter the market. Challenges are real and regulations are not yet in line with what large investors expect from a regulated or controlled industry. 

Moreover, inflation rates have been very high in recent years. One trend that has also emerged is related to inflation rates growing extremely high in “developed” economies. While inflation was a problem of the past, developed economies seem to be coming back to inflation rates that, in some cases, have surpassed 20%. 

This has created a situation in which people do not trust fiat currencies as they used to do in the past. Nowadays, people prefer to spend most of their money knowing that saving would not be useful (prices are higher and inflation affects savings). Bitcoin emerges as an alternative solution to the current monetary system and a way to escape the current fractional reserve banking system which has shaped our economies for several decades now.