‘We Remain Calm’: Bernstein Expects Bullish Bitcoin Moves When Fed Responds To Crash
Research and brokerage firm Bernstein isn’t sweating the latest Bitcoin crash, believing the asset’s short-term reaction to macroeconomic factors is a bit irrational.
In a research report published on Monday, Bernstein said it’s “not Bitcoin’s fault this time,” as the entire crypto market plunged to lows unseen since early February, including a 20% weekly drop for the leading digital currency.
“We don’t see any incremental negatives for crypto here,” wrote analysts Gautam Chhugani, Mahika Sapra and Sanskar Chindalia to clients on Monday. “If rate cuts and monetary liquidity is the usual template response to U.S. recession fears, we expect ‘hard assets’ such as bitcoin (digital gold) to reprice up.”
Crypto’s slide began with haste late last week after a slew of weak economic data from the United States bolstered recession fears across the country.
Recessions mean less earnings for companies, so they usually drive down stock values. Bitcoin and crypto have held a strong correlation to stocks historically, so they were naturally caught up in this week’s frenzied equity selloff.
The is down 5.6% over the last five trading days. Meanwhile, BTC is down 19.3% on the week, and ETH is down 25.2%.
The correlation may seem irrational to many, however, given that Bitcoin is viewed by many investors today as a “risk-off” asset, similar to digital gold.
“Bitcoin’s initial reaction as a ‘risk off’ asset is not surprising,” the analysts wrote. “This has often been the pattern for bitcoin markets (seen before in March 2020 flash crash too), particularly, as it is the only market trading over the weekend. We remain calm.”
In March 2020, Bitcoin crashed from over $9000 to under $4000 in a single day, with crypto and stocks alike plummeting due to
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