It fell 13% over the weekend as international inventory markets reacted to fears of a US recession and turmoil within the yen market.

In accordance with the Bernstein analysts, “it's not shocking that Bitcoin has reacted initially as a 'risk-off' asset.”

They notice that this sample has been noticed earlier than, similar to throughout the flash crash in March 2020, and is very notable since Bitcoin is the one market that trades on weekends.

Regardless of the latest decline, Bernstein stays optimistic about Bitcoin's future. They argue that if rate of interest cuts and monetary liquidity develop into typical responses to fears of a U.S. recession, “we count on 'actual belongings' similar to Bitcoin (digital gold) to rise in value.”

Moreover, in contrast to earlier cycles when it was harder to spend money on Bitcoin by means of cryptocurrency exchanges, the report provides, a Bitcoin ETF is now up and operating, extremely liquid, and buying and selling at roughly $2 billion per day.

Bernstein additionally highlighted Bitcoin’s connection to political dynamics, calling it the “Trump commerce” because the crypto market is supporting Trump as a crypto-friendly candidate.

“Given the crypto market's assist for Trump as a crypto-friendly candidate, Bitcoin stays the 'Trump Commerce,'” they wrote. “Because the polymarket's Trump-Harris win/lose forecast narrows, it’s not shocking to see Bitcoin and cryptocurrencies buying and selling weakly.”

They count on Bitcoin and the cryptocurrency market to stay vary sure till the US election, influenced by elements such because the presidential debates and the ultimate election outcomes.

Bernstein additionally famous that whereas the ETF noticed heavy inflows of roughly $1.2 billion over the two-week interval, outflows from Grayscale’s ETHE fund greater than offset these good points.

Total, Bernstein believes that Bitcoin and the cryptocurrency market will possible commerce primarily based on macroeconomic and electoral alerts for a lot of the third quarter of 2024. Bernstein means that traders looking for publicity to the “Trump commerce” might take into account including Bitcoin or Bitcoin shares.

Bernstein expects that if the Fed's motion results in a restoration within the general inventory market, the bitcoin and cryptocurrency markets will observe swimsuit.