According to Grayscale Research, Bitcoin might revisit its all-time high later this year if the U.S. economy avoids a recession.
This optimistic outlook follows a period of stabilization in both crypto assets and broader financial markets, which had faced sharp declines from Friday, August 2, through Monday, August 5.
Grayscale Predicts Bitcoin Rally
In an August 8 research report, analysts at Grayscale expressed optimism about the U.S. economy’s ability to achieve a “soft landing.”
Grayscale also highlighted that changes in the U.S. political landscape regarding the crypto industry might lessen the downside risks to valuations, contrasting with previous market cycles.
The firm emphasized that the potential for significant losses might be more constrained even in a weaker economic setting than in past cycles. This is due to consistent demand from newly listed U.S. exchange-traded products and the muted performance of altcoins.
Looking forward, Grayscale noted that the market’s stability will depend heavily on upcoming macroeconomic indicators and central bank actions. Key events such as the Federal Reserve’s meeting in September and the Jackson Hole Symposium are expected to determine the market’s direction.
Grayscale Research maintains a positive outlook on Bitcoin’s long-term investment potential despite the economic uncertainties. The firm suggests that even an economic downturn could strengthen BTC’s case, particularly considering the ongoing “undisciplined approach” to both monetary and fiscal policies.
Crypto Market Drop Hit ETH Harder Than BTC
The recent market drop was driven by a disappointing U.S. employment report for July, showing a rise in unemployment typical of past recessions, Grayscale says. This spurred a sell-off in cyclical assets like equities, while safe havens such as U.S. Treasury bonds and the Japanese Yen gained.
Meanwhile, Bitcoin and Ethereum both fell, with BTC showing relative strength while ETH underperformed.
Ether’s larger decline was likely due to heavy long positions in perpetual futures, built up in anticipation of the SEC’s approval of spot Ethereum ETPs in May 2024. These positions were partially liquidated during the downturn, accelerating the price drop. Additional pressure may have come from large holders like Jump Crypto and Paradigm selling off their holdings.
Ethereum is currently trading at $2,634.10, down 16.5% over the last week. Meanwhile, Bitcoin is trading at $60,781, down 5% over the last week as it recovers from a Monday dip that briefly saw its price fall below $50,000.