Bitcoin Resilience Suggests Bullish Outlook as Dollar Weakens, Stagflation Looms — Grayscale

"The most bullish 8% drawdown I’ve ever seen," said Grayscale’s Zach Pandl on bitcoin’s performance since Liberation Day.

Grayscale's Zach Pandl expresses confidence in Bitcoin's strength amid a weakening dollar and fears of stagflation, foreseeing a bullish trend. Pandl highlights how despite an 8% decline, Bitcoin has proven resilient compared to traditional markets like the Nasdaq.

Pandl sees a potential shift towards scarce commodities like Bitcoin due to concerns over stagflation negatively impacting stocks and bonds but benefiting alternative assets. He notes an observable rotation from tech stocks to commodities like Bitcoin, as demonstrated by the performance against Roundhill "Magnificent 7 ETF."

Advocates of Bitcoin as a safe haven investment have found validation in recent market fluctuations, suggesting a growing conviction in the cryptocurrency's ability to thrive in uncertain times. Pandl remains optimistic about Bitcoin's future value, anticipating new all-time highs this year amidst changing market dynamics.

Pandl is bullish on bitcoin in an environment where the dollar is potentially losing its place as a global reserve currency.

“Stagflation is going to be negative for stocks and bonds, and, historically, that has been positive for scarce commodities. Investors who are concerned by stagflation are looking for alternative assets that can drive returns. In traditional markets that might be gold or copper, and bitcoin,” he said.

Pandl says bitcoin’s relatively good performance reflects a rotation away from large-cap tech stocks towards commodity assets like bitcoin. You can see this in the performance of bitcoin against Roundhill “Magnificent 7 ETF.” You can now buy more of that ETF with one bitcoin compared to a week ago.

To those who subscribe to Bitcoin’s long-term investment thesis as a safe haven in uncertain times, the last few days have been a test case where bitcoin is winning. In theory, say these advocates, bitcoin should benefit as investors seek alternatives to dollars in times of stress.

“If you believe that the erosion of the dollar’s position is part of the bitcoin thesis, then your conviction in that thesis in the last week should have gone up,” Pandl says.

He expects bitcoin’s price to rise in the medium-term, reaching new all-time-highs this year.

“The price of bitcoin is down but conviction is up and there’s no need to change the medium term price outlook,” he said.