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Bitcoin and Ethereum could ‘regain edge’ as their risk vs. stocks lowers, data shows

Bitcoin and Ethereum could ‘regain edge’ as their risk vs. stocks lowers, data shows

The two largest digital assets by market capitalization – Bitcoin (BTC) and Ethereum (ETH) – are continuing their slow but sure advance over the past days and weeks, helping the entire cryptocurrency market move upward and showing relative strength compared to traditional assets.

Meanwhile, Bitcoin and Ethereum could continue their growth and even “regain edge” as they record very low volatility and risk compared to the stock market, according to the new Bloomberg Intelligence report shared by senior commodity strategist Mike McGlone on November 3.

Specifically, the volatility of BTC and ETH, as well as the Bloomberg Galaxy Crypto Index (BGCI), have dropped to low levels compared to most other assets, which, according to the report, “may tilt risks against those not accumulating partial crypto exposure.”

Crypto risk versus equities. Source: Bloomberg Intelligence

‘Cryptos could regain edge’ despite Fed

As the report stresses, “crypto assets’ period of outperformance in 1H20 was marked by very low volatility vs. the stock market, and there are potential parallels into 2023,” which means that “Bitcoin, Ethereum, cryptos gains appear poised to resume.”

“A top headwind for most risk assets is that the Federal Reserve is intensifying tightening as equity prices and global GDP growth diminish, but cryptos are showing signs that they could resume their propensity to outshine.”

Furthermore, the report notes that the Fed’s ‘sledgehammer’ approach may be forming Bitcoin’s foundation as “its price of around $20,500 on Nov. 2, with the one-year federal funds future (FF13) signaling rates close to 4.75%, was about the same as it was in June, when FF13 was near 3.5%.”

Fed tightening forming Bitcoin foundation. Source: Bloomberg Intelligence

At the same time, this ‘sledgehammer’ seems to be firming Ethereum’s foundation at “around $1,000, (…) potentially building a base around the 2018 peak, when global liquidity topped out around plus 14%.”

Fed tightening firming Ethereum foundation. Source: Bloomberg Intelligence

Finally, the report also noted that supplies of both decentralized finance (DeFi) assets were dipping on an annual basis, concluding that the continuation of this trend supports the growth of their prices.

Bitcoin and Ethereum price analysis

As things stand, Bitcoin was at press time changing hands at $20,597, up 1.28% on the day, as well as 2.07% across the week, as per data retrieved by Finbold on November 4. 

Bitcoin 7-day price chart. Source: Finbold

In parallel, Ethereum also recorded advances during the observed periods, gaining 2.25% in 24 hours and 5.03% over the week, currently trading at $1,581.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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