The commodity strategist forecasts that despite challenges for high-risk assets, Bitcoin will make a robust recovery from the current market.
Bitcoin (BTC) has been dubbed a “wild card” by Bloomberg intelligence expert Mike McGlone and is “ripe” to outperform once traditional markets reach their bottom.
The direction of the stock market will probably be determined by the US Federal Reserve’s tightening, but Bitcoin is still a “wildcard” that could defy the trend, according to McGlone in a post on Linkedin and Twitter on Wednesday. McGlone wrote:
“Bitcoin is a wild card that’s more ripe to outperform when stocks bottom, but transitioning to be more like gold and bonds.”
More information was provided by the commodities strategist in a report released on Wednesday, which indicated that despite a “strong headwind” in favor of high-risk assets, Bitcoin was poised to make a robust recovery from the bear market:
“It’s typically a matter of time for the fed funds gauge to flip toward cuts, and when it does, Bitcoin is poised to be a primary beneficiary.”
While gold and treasury bonds would also move in the same direction as Bitcoin, the report states that Ether (ETH) “may have a higher correlation with stocks.”
In addition to several significant interest rate increases throughout 2022, the Federal Reserve has increased its quantitative tightening. The most recent increase on July 27 was 75 basis points.
Although the precise timing of the Fed’s quantitative tightening is unknown, several experts projected the endgame would start “at some point in 2023,” per a Bloomberg report published in August.
Quantitative tightening is a contractionary instrument for monetary policy that central banks employ to lower the amount of money supply and liquidity in an economy, which can lower expenditure on markets like stocks. Despite Bloomberg’s upbeat outlook, other analysts think that there has been an increase in the correlation between Bitcoin and equity markets.