 ▲ Bitcoin (BTC) |
Bitcoin (BTC) is reportedly pricing in the possibility of a severe recession in the U.S. economy, with analysts suggesting that depending on the economic outlook ahead, the strongest profit opportunity since the COVID-19 crisis could emerge.
According to cryptocurrency media outlet U.Today on February 12 (local time), Bitcoin has already largely reflected the worst-case recession scenario currently anticipated by the market. Crypto analyst Andre Dragosch assessed that Bitcoin’s current valuation points to a level of economic uncertainty even more severe than during the 2020 COVID-19 pandemic. If a downturn as deep as feared does not materialize, Bitcoin could stage a historic rebound based on its asymmetric risk-to-reward profile.
Dragosch noted that the divergence between Bitcoin and actual macroeconomic indicators is among the largest on record. The gap between leading economic indicators and Bitcoin’s implied growth price is far more pronounced than in previous bear markets. According to Dragosch, the market has priced Bitcoin as if it were in a severe recessionary environment, reflecting excessive fear that is disconnected from real economic data.
The Bitcoin-to-gold price ratio was also cited as a key indicator suggesting that Bitcoin is currently undervalued. The relative value of gold compared to Bitcoin has reached historically imbalanced levels, a phenomenon that typically appears when selling pressure on risk assets is near its peak. Dragosch projected that such an environment could favor risk assets like Bitcoin while leading to reduced relative demand for gold.
Bitcoin has recently become more sensitive to macroeconomic fluctuations, in tandem with weakness in software stocks. Dragosch added that the market is adopting an overly defensive stance, even pricing in unrealistic negative factors such as quantum-related risks. However, this irrational discounting may instead present the most attractive entry point for long-term investors since 2020.
Investors are closely watching whether Bitcoin can break out of its current prolonged range-bound movement and macroeconomic uncertainty to enter a new upward phase. The point at which market fear, which has moved ahead of actual economic indicators, begins to subside is expected to serve as a turning point for Bitcoin’s price. While Bitcoin’s fundamentals remain solid, technical analysis and on-chain data suggest that selling pressure is gradually being exhausted.
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