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Bitcoin (BTC) is likely to outperform in the face of a dovish reversal by the US Federal Reserve and a weaker dollar, according to digital asset manager CoinShares.
The company’s bullish outlook on BTC comes amid a sharp rise in cryptocurrencies on the back of the Fed’s 0.75% rate hike and recession talk. However, the rally has also come in a bearish move as BTC price fell to his $17,600 level and then struggled to break above $22,000.
CoinShares says a suspension could give way to the outperformance of its flagship cryptocurrency, including its separation from equities.
“Bitcoin price performance weakens in the face of aggressive Fed, but current price performance slump may be short-lived‘ explained the company twitter thread.
The Fed’s hawkish tendencies were necessary as central banks try to control rising inflation, but market analysts say monetary policy could turn dovish to support economic growth and jobs. I believe there is. CoinShares suggests in its assessment that such a move could lead to US dollar weakness. This is a combination of macro factors that could boost Bitcoin’s new rally.
“We think the US Federal Reserve is likely to continue raising rates over the summer,The asset manager said:We also believe that the outlook for economic growth will soften after that and that the dollar will likely weaken significantly.
As to what these factors will bring to the market, the company said decoupling from equities is likely, and this scenario is likely in the middle of a “recession or stagflation.”
[4/5] Bitcoin price is likely to diverge from growth stocks, with the former benefiting from a dovish Fed and a weaker US dollar, while the latter is likely to underperform in the face of recession and stagflation. I think it’s highly likely that it’s a policy mistake.
CoinShares (@CoinSharesCo) July 29, 2022
Bitcoin is trading around $24,600 on Saturday night, up more than 8% over the past week and more than 23% over the past 30 days.
