Lead Commodity Strategist at Bloomberg Intelligence Mike McGlone explained that October has historically been the best month for Bitcoin (BTC) since 2014, with average gains of around 20% for the month, and that commodities appear to be peaking , could indicate that Bitcoin has bottomed.
In an Oct. 5 Bloomberg Crypto Outlook report, McGlone says while rising interest rates are putting downward pressure on most assets globally, Bitcoin is gaining the upper hand relative to commodities and technology stocks like Tesla, with the report noting:
“As the ebbing economic tide turns, we see Bitcoin, Ethereum and the Bloomberg Galaxy Crypto Index tending to outperform most major assets.”
McGlone notes that Bitcoin has its lowest-ever volatility against the Bloomberg Commodity Index (BCOM), which tracks the price movements of global commodities such as gold and crude oil, and suggests that historically, Bitcoin’s volatility is more likely to recover than that of Commodities when the crypto hits new highs.
Bitcoin vs. BCOM and Bitcoin 260-Day Volatility vs. BCOM 260-Day Volatility. Source: Bloomberg Crypto Outlook
McGlone suggested that Bitcoin (BTC) could trend “towards a risk-off asset like gold and US Treasuries” in the second half of 2022, following low volatility and a potential peak in commodity prices in September.
Historically, Bitcoin has been highly correlated with tech stocks, making it a risky asset due to its volatility that traders are likely to sell in an environment where investors are trying to reduce risk.
Related: 5 reasons why bitcoin could be a better long-term investment than gold
Data released Oct. 4 by Kaiko Research supports the notion that Bitcoin may be starting to behave more like “digital gold,” with Bitcoin’s correlation to gold posting a +0.4 denier after a US dollar strengthening highest level in more than a year interest rates rise.
Bitcoin’s correlation with gold over the last 12 months. Source: Kaiko
A correlation of +1.0 means that movement between two different assets is synonymous, e.g. For example, a 10% rise in gold would be matched by a 10% rise in bitcoin if the two assets had a +1.0 correlation.
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