Wall Street Analyst: Bitcoin's Resilience Amidst Sell-Off and Potential Outperformance in Recessionary Environment
In a recent analyst note by Mike Colonnese, CFA, the focus shifts to the recent developments in the Bitcoin (BTC) market and its implications for the future.
The study details BTC's reactions to significant sell-offs, the reasons behind the previous week's sharp decline, and prospects for BTC in a recessionary environment.
Bitcoin saw a 10.6% decrease week-on-week, settling at $26,176 by week's end. This decline triggered a 20% slump in mining stocks, underperforming the S&P 500 (-2.1% w/w) and the Nasdaq (-2.6% w/w).
Yet, the network hash rate surged by 8.8% week-on-week, touching 410 EH/s (seven-day average) — a notable high.
Interestingly, while the BTC price fell, the network difficulty remained steady at 52.4T.
The price dip caused an 11.3% drop in hash prices to $0.064/TH/day, highlighting the intricate BTC ecosystem dynamics.
The report points out two significant factors for the swift sell-off:
SpaceX's decision to reduce its BTC holdings value by $373 million due to Elon Musk's influence on crypto markets.
The bankruptcy of Evergrande, a significant Chinese property developer, on August 17, 2023, sparked worries about China's economic state and the global economic climate.
Colonnese delves into how BTC might fare in an economic downturn. If the Federal Reserve slashes rates during a US recession, it might bolster BTC prices.
Furthermore, if BTC maintains its store-of-value reputation, it could even surpass other risk assets during recessions.
The report offers a glimpse into the operations of major Bitcoin mining corporations.
Exhibit 3 encompasses BTC mining industry stats from company reports, featuring firms like Marathon Digital Holdings, Core Scientific, and Riot Blockchain.
Exhibit 4 displays details about BTC
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