The February investment report from Bloomberg Intelligence argued in favor of investments in cryptocurrencies. In particular, he suggested that the Bitcoin, Ethereum, and USD stablecoins will continue to perform well.

At the same time, however, smaller digital assets could struggle due to excessive speculation, Bloomberg analysts said.

“Some purge of the speculative excesses of 2021 may mark much of 2022, but Bitcoin is ready to come out ahead.”

BTC vs Oil

In particular, cryptocurrencies may be in a good place relative to inflation-linked commodities. While oil rose on the risk of war in Ukraine, Bitcoin and Ethereum fell.

The report noted that the Bloomberg Galaxy Crypto Index is down about 20% in 2022. On the other hand, the total return of the Bloomberg Commodity Index is up about 10%. However, the document suggested that this may be a “temporary glitch”, and trends are heading in the opposite direction.

Supply, demand, adoption, economics, and advanced technology all point to cryptocurrencies continuing to outperform commodities. Technological developments will also serve as a boon for crypto versus oil.

As a representation of advanced technology, Bitcoin is gaining traction as a benchmark global digital asset, while oil is being replaced by decarbonization and electrification.

Limited supply of Bitcoin

Furthermore, the report noted that Bitcoin is, by design, an asset with limited supply. In fact, it has no elasticity of supply. This means that regardless of demand, the supply of BTC will remain essentially the same. That is not the case with oil, as oil producers will increase production when prices rise.

However, competition in the crypto space led to the creation of more than 17,000 individual tokens. These tokens consume the demand for Bitcoin, whose dominance is currently below 42%.

By contrast, in March 2021, Bitcoin’s total share of the crypto market capitalization was 20% higher: 62.2%. Still, it only dominates a handful of digital assets. About half of the total figure could be due to the rise of Ethereum, which went from 11% to 18.8% in the same period.

In addition to Bitcoin and Ethereum, Bloomberg expects stablecoin market share to continue to rise as well due to increased demand for non-volatile assets.

$100K for Bitcoin?

Taking all of the above into account, analysts at Bloomberg noted that the next “key bitcoin threshold may be $100,000.” It’s worth noting that they’ve been predicting a six-digit price for a few years now. However, the asset has not yet gone that far.

They believe the most recent market crash, in which BTC fell more than $10,000 in days to a six-month low below $33,000, may be over.

“Our chart shows that this period of consolidation may be ending, with past least resistance pointing up.” – read the newspaper.

BTC/USD. Source: Bloomberg

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