Upbeat bitcoin options market points to $40,000 being the bottom

To be sure, bitcoin remains as volatile as before and trading could be choppy in an environment in which the Federal Reserve is becoming more hawkish, according to Marko Papic, chief strategist at Clocktower Group. Bitcoin’s correlation with the S&P 500 remains at one of its highest readings in the past 12 months. 

In this environment, “you don’t really want to own high-beta risk assets”, he said. “You want to own things that are much more sensitive to value, much more sensitive to global growth and cyclicals, and that’s why I don’t think crypto and bitcoin are going to really do great over the next three to six months.”

The $40,000 level “has been the key pivot point”, said Bloomberg Intelligence’s Mike McGlone. Up next, $50,000 comes into play before bitcoin resumes its upward trend towards his forecast of $100,000, he said.

“Demand and adoption are increasing and supply is declining,” McGlone said. “Something has to reverse the increasing bitcoin adoption trend or the rules of economics point to higher prices. I expect demand and adoption trajectories to remain favourable.”

McGlone is not alone in his calls for bitcoin to more than double from current levels. Jonathan Padilla, co-founder of Snickerdoodle Labs, a blockchain company focused on data privacy, expects bitcoin to hit that level by end-2022, and also said that $40,000 is likely to be a floor, given the level of institutional capital he expects to flow into the market this year.

“The institutional nature is dramatically different from the primarily retail focus in 2017, 2018,” Padilla said. “That shows the strength of institutional buying and the demand from the long-term perspective.”

David Tawil, president of ProChain Capital, is ready to watch the $38,000 level in this past week’s sell-off. But he hopes to see US tech stocks start to rebound, which signals to him that “the bottom is in” for bitcoin, he told Bloomberg’s QuickTake Stock broadcast. 

“This is a pretty good buying level, especially if we go ahead and just retrace the losses, you’re talking about a 50%-plus gain from a year,” Tawil said.   

Bloomberg News. More stories like this are available on bloomberg.com