Bitcoin Sees Asymmetric Risk-Reward Similar to COVID, Says Analyst

Bitcoin could have substantial upside potential as its current price seems misaligned with the broader macroeconomic outlook, according to a crypto analyst.

Key Takeaways

Bitcoin exhibits an "asymmetric risk-reward" profile reminiscent of conditions during the COVID-19 pandemic.
Dragosch asserts that Bitcoin is factoring in a recessionary environment, having already absorbed much negative sentiment.
Despite recent downturns, some crypto analysts foresee a rebound, echoing past trends that typically precede strong market rallies.

Bitcoin Sees Asymmetric Risk-Reward

André Dragosch, head of research at Bitwise Europe, draws parallels between the current market conditions and those seen during the COVID-19 pandemic. He believes Bitcoin is currently pricing in a highly pessimistic view of global economic growth, similar to March 2020 when the price plummeted due to pandemic fears.

Bitcoin’s Price Dynamics in a Challenging Environment

According to Dragosch, “Bitcoin is essentially pricing in a recessionary growth environment." He emphasizes that the cryptocurrency has already accounted for much of the adverse news circulating in the market. A reassuring statement from US Treasury Secretary Scott Bessent recently confirmed that America does not anticipate entering a recession by 2026.

Cryptocurrencies, Bitcoin Price

Bitcoin has declined by 17.33% over the last 30 days. Source: CoinMarketCap

However, Bitcoin's price isn't meeting the expectations of many investors this year. After hitting a new all-time high of $125,100 on October 5, it faced a downturn triggered by a significant $19 billion liquidation event on October 10—coinciding with US President Donald Trump's announcement of 100% tariffs on Chinese goods.

Market sentiment soured further when Bitcoin dipped below the crucial psychological level of $100,000 on November 13 and has struggled to regain that status. Although it briefly fell below $90,000 on November 20, it rebounded above this level shortly after, offering some renewed optimism.

Dragosch remains hopeful that global economic growth will soon recover, buoyed by the effects of "preceding monetary stimulus" which, he argues, can sustain growth well into 2026, much like the recovery seen after the COVID-19 crisis. “I genuinely think we’re staring at a similar macro setup right now,” he added.

Optimism Amidst Bear Market Speculation

Despite the challenges, many within the crypto sector are optimistic about a potential recovery. Crypto trader Alessio Rastani mentioned in a recent conversation with Cointelegraph that the latest price dip might not signify the onset of an extended bear market.

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He suggests that historical data points to a recurring market setup that has led to strong rallies about 75% of the time. Furthermore, BitMine chair Tom Lee expressed confidence that Bitcoin will recover to $100,000 by year-end, with the possibility of even setting new all-time records.

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