Global market parties may soon be ending with Bitcoin being positioned as one of the top assets. This shift in U.S. Federal Reserve’s monetary policy will have ripple effects on the stock market, as they raise interest rates and reverse their asset buying program.
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At least, that’s how Mike McGlone, Senior Commodity Strategist for Bloomberg Intelligence views it. A recent interview with Scott Melker’s “The Wolf Of All Streets” podcast, McGlone talked about Bitcoin as a risk-on asset, inflation, and the potential correction that will hit markets because of the change in FED policy.
The expert reminded investor of the old adagio “Don’t Fight the Fed” which in the current macro-environment could translate to “don’t long risk assets”. Bitcoin’s shift from a high-risk asset could result in it becoming a low-risk one.
McGlone said the following on the financial institution’s coming policies to decrease inflation, sitting at its higher levels in 40 years, and what it could mean for Bitcoin in the long run:
(…) the lesson I learned about the FED, what I think is happening in this case, is that will job on until the market does their job for them or they have to keep raising rates until markets go backwards, which mean the stock market (…). The stock market is in a losing situation. Although they (the FED), will continue to restrict until markets ask them to, I believe Bitcoin will emerge as a better option.
The expert forecasted a huge 10% to 20% correction of the stock market, which would lead to a 1:1 correlation event with risk assets. This event’s impact on BTC’s price could be short live, as it could for Ethereum (ETH), but the altcoins sectors might be heavily hit with some of the latest popular cryptocurrencies returning to their previous lows.
Was The Bitcoin Bull-run Over?
McGlone denied that there was any evidence to back the theory of a correlation between Bitcoin prices and stock markets. According to McGlone, the benchmark crypto has only been in mainstream use for a short time.
McGlone noted that Bitcoin (BTC), which is rapidly strengthening, has strong fundamentals. The crypto asset’s supply is on a sustain decline, with a rising demand, and a reduction in volatility, “there is not too many asset that can say that”.
Crypto dollars – #CryptoGlobal free-market capitalism is exemplified by assets, with the dollar being the top prize. The mainstays #Bitcoin, #EthereumThe crypto-dollars are set to continue their dominance over the 16,000 other players competing for speculative leadership pic.twitter.com/rmqfs62ByA
— Mike McGlone (@mikemcglone11) January 16, 2022
The first crypto by market cap has been stealing the shine from traditional hard assets, such as gold, while it increases its adoption levels, and it is included in some of the world’s largest companies’ balance sheets. The bull run seems to be over, but Bitcoin prices seem to have stopped.
McGlone does believe that there will be a follow-trough in the future. At the moment, BTC adoption could be “burdensome” for large investors, but the expert expects time to become a headwind for the cryptocurrency. He also said that:
I’m always skeptical of bull markets that are so extremely bullish, like the stock market right now (…). Then I look to this other asset (Bitcoin), it’s new, it’s just being adopted, demand is going up, supply is going down, which one do I want to be allocated to in the big picture?
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As of press time, BTC’s price trades at $42,010 with sideways movement in 24-hours.
