One of Bloomberg’s most respected analysts says that Bitcoin (BTC), will soon be no longer a risky asset. Investors should prepare for a new price correction.
Mike McGlone from Bloomberg Intelligence was a senior commodity strategist and made a statement on Jan. 18 on the Wolf of All Streets Podcast.
McGlone: The Bitcoin is the’most risky’ crypto investment
McGlone’s midterm forecast for 2022 will disappoint those who expect a dramatic return of form as Bitcoin struggles.
He claims that the United States Federal Reserve will almost guarantee an end of stock market gains — and crypto will also suffer.
He began, “The number one theme that I have been using for months is ‘Do Not Fight the Fed’.”
“If you have long-term risk assets, you are fighting against the Fed. Cryptos are the most risky assets. Remember that Bitcoin is among the most risky cryptos.
The Fed is trying to curb inflation and drastically decrease asset purchases. This makes risk assets less attractive in the short term. McGlone sees a silver lining in Bitcoin’s intrinsic appeal.
He said that Bitcoin is “transitioning from a high-risk asset to one that is less risky,” and added that he believes Bitcoin would be better off after the policy changes.
“Here’s what I predict: The markets will pull back and we see a correction of 10-20% in the stock market. It is a common phenomenon that all correlations work in unison. Bitcoin is better for it.”
BTC/USD 1-week candle chart (Bitstamp). Source: TradingView
The Fed defends its balance sheet
McGlone is well-known for his bullish views on Bitcoin, but he’s not the only one who cautions.
Related: Analysts warn Bitcoin could plunge to $38K “before an eventual breakout”
Cointelegraph reported that even Bitcoin traders are anticipating testing times. Arthur Hayes, former CEO of BitMEX’s derivatives trading platform BitMEX, also shared the same sentiments earlier in the month.
He wrote that “loose US monetary conditions certainly influenced the meteoric increase in price (albeit a few month delayed),” in a blog post about policy and Bitcoin.
Bitcoin traded sideways since M2% growth stopped. If M2 is expected to reach 0%, and possibly even go negative in quick order, then Bitcoin (absent any asymptotic increase in the number or transactions processed via it) will likely go much lower.”
A chart was attached to illustrate the implications of a more conservative environment.
BTC/USD vs. U.S. Money Supply Chart (screenshot). Source: Arthur Hayes/ Medium