Bernstein analysts Gautam Chhugani, Mahika Sapra, and Sanskar Chindalia have shared their insights on when Bitcoin’s price could turn bullish again and reach new highs. They also discussed the possible impact that former US president Donald Trump could have on Bitcoin’s trajectory.
In a research note on August 5, the analysts mentioned that they anticipate a recovery in Bitcoin and the broader crypto market if the equity markets bounce back in response to actions taken by the Federal Reserve. They believe that a rate cut and increased liquidity injection into the economy could trigger this recovery.
The recent crash in the crypto market was not solely attributed to Bitcoin but was largely influenced by fears in the equity markets and other macroeconomic factors. The US stock market is currently experiencing a significant decline amid concerns about a potential recession, leading to massive sell-offs in Bitcoin and other cryptocurrencies.
Chhugani, Sapra, and Chindalia predict that these macroeconomic factors will continue to impact Bitcoin and the crypto market throughout the third quarter. Speculations suggest that the Fed might cut interest rates at the upcoming FOMC meeting in September, which could benefit risk assets like cryptocurrencies.
Market experts, including economist Jeremy Siegel, have called for an emergency rate cut in addition to the projected cut in September. However, it remains uncertain whether the Fed will yield to such pressures, as they do not believe the US is on the brink of a recession.
The upcoming US election is expected to influence Bitcoin and the broader crypto market, with the analysts dubbing Bitcoin as a ‘Trump trade.’ They anticipate that crypto assets will remain range-bound until after the election, with a potential positive reaction from Bitcoin if Trump secures victory due to his perceived crypto-friendly stance compared to Democratic candidate Kamala Harris.
Despite the recent decline in Bitcoin’s price, the Bernstein analysts maintain a bullish outlook on the cryptocurrency in the long term. They see no incremental negatives for crypto at the moment and highlight the institutional adoption trend through Spot Bitcoin ETFs, which indicates a positive outlook as more institutional investors embrace Bitcoin.
The analysts also anticipate more approvals for wirehouse firms to offer Spot Bitcoin ETFs in the third and fourth quarters, providing additional avenues for asset allocation to Bitcoin. Major financial institutions like Morgan Stanley have already started offering these ETFs to their wealthy clients, signaling a growing institutional interest in Bitcoin.
In conclusion, while the short-term outlook for Bitcoin may be influenced by macroeconomic factors and the US election, the long-term prospects for the cryptocurrency remain positive. Institutional adoption, regulatory developments, and market trends indicate a promising future for Bitcoin and the broader crypto market.
