Bitcoin (BTC) Price Will Turn Bullish Again When Equity Markets Recover – Bernstein Analysts

Bernstein analysts Gautam Chhugani, Mahika Sapra, and Sanskar Chindalia have provided insights into when Bitcoin's price could turn bullish again and record new highs.

Renowned Bernstein analysts Gautam Chhugani, Mahika Sapra, and Sanskar Chindalia have shared their insights on the potential timing of Bitcoin's return to bullish territory and record highs. The analysts also highlighted the impact that former US President Donald Trump could have on Bitcoin's trajectory.

According to a research note dated August 5, the Bernstein analysts anticipate that Bitcoin and the broader crypto market will recover if the equity markets rebound due to a response from the Federal Reserve. They expect this response to be a rate cut and an injection of more liquidity into the economy.

The analysts noted that the recent crash in the crypto market was not primarily due to Bitcoin but largely to "fears in equity markets" and other macroeconomic factors. The US stock market has seen a significant decline amid concerns that the US economy may enter a recession.

Bitcoin, due to its historical correlation with these equities, also experienced a wave of massive sell-offs, which began during the weekend. These sell-offs drove the flagship crypto below $50,000 for the first time since February. The broader crypto market followed suit, with altcoins experiencing sharp declines.

Chhugani, Sapra, and Chindalia anticipate that the macro side will continue to impact Bitcoin and the crypto market throughout Q3. There have been speculations that the Fed may cut interest rates at its next FOMC meeting in September, which would be positive for risk assets like cryptocurrencies.

Prominent economist Jeremy Siegel has called for an emergency rate cut, in addition to the projected cut, which could positively impact Bitcoin. However, it remains to be seen if the Fed will respond to such pressures, especially considering their stance that the US is not yet close to a recession.

The US election is another factor that the analysts expect to influence Bitcoin and the broader crypto market. They noted that Bitcoin "remains a 'Trump trade'" and expect these crypto-assets to continue trading within a range until after the election. Bitcoin is likely to respond positively if Trump wins, given his more crypto-friendly stance compared to Democratic presidential candidate Kamala Harris.

Despite the recent downturn, these Bernstein analysts maintain a bullish outlook on Bitcoin in the long term, stating that there are no "incremental negatives for crypto" at the present moment. They highlighted the institutional adoption trend through the Spot Bitcoin ETFs, which bodes well for sustained demand as more institutional investors continue to adopt the flagship crypto.

These analysts also expect more "wirehouse approvals into Q3 and Q4, thus providing further on-ramps for asset allocation to Bitcoin." Notably, powerhouse Morgan Stanley has reportedly told its financial advisors that they can begin offering these Spot Bitcoin ETFs to their wealthy clients starting August 7.

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