- Bernstein reports that FTX’s collapse was the catalyst for a new bullish cycle in the cryptocurrency market.
- Bernstein predicts Bitcoin will act as a safe haven asset against potential dislocations in the banking system.
According to a research report from Bernstein, FTX’s collapse was the catalyst for a new bullish cycle in the cryptocurrency market. The report claims that the exchange’s downfall removed the final tranche of “toxic crypto leverage” and taught digital asset investors the importance of decentralization and self-custody wallets.
The report also stated that macro catalysts are aligning for bitcoin, the world’s largest cryptocurrency by market cap, with continued weakness in US regional banks and further deposit outflows towards money market funds and the big four US banks, all reflecting concerns around the “centralization of money.”
The report’s authors, Gautam Chhugani and Manas Agrawal, stated that any potential dislocation, whether on the bank’s credit side or on the sovereign side, positions bitcoin perfectly as a safe haven asset alongside gold.
Bernstein predicts that the new crypto cycle is not yet fully appreciated, with a number of positive factors lining up. These include macro catalysts, a new bitcoin mining cycle, the continued successful upgrades of the Ethereum blockchain, and the success of Ethereum scaling ecosystems such as Arbitrum.
Meanwhile, Bitcoin has rallied 80% this year, with prices surging 23% in March amid multiple bank failures in the US. Ethereum’s native token ether is up 76% on a year-to-date basis. The Ethereum blockchain’s fees are up threefold, “reflecting the growing user intensity and token prices, post FTX,” the note said.