Despite the ongoing bear market and falling bitcoin price, some analysts still maintain their faith in Bitcoin. Bloomberg analyst Mike McGlone is one of them. He took to Twitter on Wednesday to express his thoughts on the most popular cryptocurrency.
The analyst strongly believes that Bitcoin will recover from the bear market. McGlone posted his thoughts on recent Bitcoin price playouts on LinkedIn and Twitter. He saw the tightening of the United States Federal Reserve as a determining factor in the direction of the stock market. He added that Bitcoin is a “wildcard” that can defy the trend.
The Bloomberg analyst likened Bitcoin to a wild card poised to perform well when stocks fall. He added that Bitcoin is evolving to be more like gold and bonds. The report suggests that while Bitcoin will be more like gold and Treasuries, Ether may be more like stocks.
BTC will benefit from an increase in Federal Reserve interest rates
It is not yet clear when the Federal Reserve’s quantitative easing will be suspended. However, economists have predicted that the tipping point will begin sometime in 2023. This statement is according to an August article published by Bloomberg.
The Federal Reserve’s quantitative tightening has begun amid interest rate hikes throughout the year 2022. The term quantitative tightening is a monetary policy tool used by Central Banks to control the money supply and liquidity and limit spending in stocks and more.
The most recent rate hike was a 75 basis point increase on July 27. It is worth noting that the price of BTC rose above $22,000 in July after the addition of another major rate hike by the Federal Reserve.
BTC’s rise as interest rates rose could be the basis of McGlone’s claim that Bitcoin will benefit from the predicted recession.
Economists predict an increase in the Cn Crypto-Equity correlation
Despite Bloomberg’s strong view, other analysts believe that Bitcoin is now more like the stock market than before.
One expert said that the relationship between the S and P 500 index and BTC tends to be 100%. Some IMF economists have claimed to predict a 10-fold increase in cryptocurrency market correlation in some parts of the world.
According McGlone, Bitcoin will likely move from a risk asset to a risk asset in the second half of 2022. This is because the macro sector is rapidly trending towards recession. He added that the cryptocurrency market has eliminated most of the speculative chokes that appeared in 2021.
The market is now ripe for a new rally. McGlone also noted that a rise in interest rates could lead to a global deflationary recession that would benefit BTC.
Featured image from The BBC, chart from TradingView.com