Crypto Market Has Potential to Hit $10 Trillion This Cycle, Says Bloomberg Analyst

As the total market capitalization of the cryptocurrency space keeps on growing and potentially moves to as much as $10 trillion, Bloomberg Intelligence analyst Jamie Coutts has suggested that some funds employing specific trading strategies could see their assets under management explode upward.

In a series of posts Coutts told his followers on the microblogging platform X (formerly known as Twitter) that the cryptocurrency asset class is headed towards $8 trillion to $10 trillion this cycle, and noted he expects to see “the proliferation of systematic and factor-based strategies.”

The total market capitalization of the cryptocurrency space is currently at $1.4 trillion, up from $800 billion seen at the beginning of the year as the space started recovering from a bear market that saw the price of the flagship cryptocurrency Bitcoin plummet from a $69,000 all-time high to a low around $16,000.

Bitcoin is now trading at $36,500 as the cryptocurrency market recovers, partly on hopes a spot Bitcoin exchange-traded fund (ETF) is listed in the United States, according to analysts. Major financial powerhouses that collectively manage an astounding $27 trillion in assets are making inroads into the world of Bitcoin and cryptocurrency after a race to list such a fund kicked off.

BlackRock, the world’s largest asset manager, took a pioneering leap on June 16 with a spot Bitcoin exchange-traded fund application, seemingly igniting a domino effect as peers rushed to file similar applications.

The $27 trillion figure, it’s important to point out, represents a grand total of assets under management across the aforementioned institutions, and only a minuscule fragment of this gargantuan sum is anticipated to be channeled into cryptocurrency investments.

Coutts, in a separate post, also noted that he doesn’t believe that the cryptocurrency market’s recent price rises are just a result of hype surrounding a potential spot Bitcoin ETF, adding that in the first quarter of the year Bitcoin was “sending the clearest of singlas that the very nature of asset allocation was changing.”

In the first quarter, the Bloomberg analyst said that the “spread between BTCs risk-adjusted return and global assets while narrowing since 2013, has reversed in the past 3Y (or the last BTC cycle).”

Notably, Bitcoin whales have over the course of the past week been realizing profits after redistributing around 60,000 BTC worth around $2.22 billion, after a 30-day rise of around 35% for the cryptocurrency.

The price of BTC has recently briefly dropped below the $36,000 mark after data from the US Department of Labor revealed that last month inflation pressures eased in the country, showing core consumer prices, which exclude food and energy, dropped to the lowest level in two years and cast doubt on the Federal Reserve’s plans to raise interest rates soon.

The Labor Department reported that the overall consumer price index for October was 3.2%, much lower than the 3.7% recorded in September and below the market expectation of 3.3%. Compared to the previous month, inflation was flat in October, down from 0.4% in September and 0.6% in August.

Core inflation, which is a more stable measure of price changes, slowed to 4.0%, the weakest since 2021, while the monthly increase of 0.2% was also in line with analysts’ forecasts. Reacting to the numbers the S&P 500, the stock market’s benchmark index, rose significantly.

Featured image via Unsplash.