Summary
- Grayscale Research reveals that if the US can avoid recession, token valuations can rebound.
- Under such conditions, Bitcoin could retest its ATH in 2024.
In its latest market research notes, Grayscale reveals that under certain conditions, Bitcoin could retest its ATH later this year.
Grayscale Research recalls that crypto valuations declined at the beginning of this month, amidst worries about the US economic outlook and broader financial market volatility.
They note that if the US economy remains on a path to a “soft landing”, we could see token valuations rebounding.
Crypto and Broader Financial Markets
Crypto and the broader financial markets have seen a stabilization midweek, after the sharp decline from August 2 through August 5.
Grayscale notes that although major token prices usually have a low correlation with other asset classes, volatility in the traditional markets can also affect crypto valuations.
They noted that the proximate cause of the drawdown was a weaker-than-expected US employment report for July published on August 2.
The report showed that the unemployment rate had gone up by a magnitude that was seen in past recessions.
Also, fears of a cyclical downturn contributed to weaker performance from assets like equities and traditional safe havens like US Treasury bonds, the JPY, and the Swiss Franc.
Grayscale noted that among assets, Bitcoin held up relatively well on a risk-adjusted basis.
Bitcoin to Retest ATH in 2024
Grayscale expects Bitcoin to retest its ATH this year but only under the condition that the US economy can avoid recession and remains on a path to a soft landing.
However, according to their notes, even in a weaker economic environment, Grayscale Research has reasons to believe that downside risks to prices may be more limited compared to the past drawdowns.
According to them, the undisciplined approach to monetary and fiscal policy is one of the reasons why some investors chose Bitcoin.
They note that a period of economic weakness could reinforce the longer-term Bitcoin investment thesis.
Regarding Bitcoin’s price today, at the moment of writing this article, BTC is trading above $60,000, up by more than 6% today. Earlier, BTC was able to break the important $62,000 level.
Bitcoin is definitely surrounded by favorable conditions, including Russia legalizing crypto and mining, and huge support from the US politics, among others.