Despite the ongoing bear market and bitcoin price decline, some analyst still retains their confidence in Bitcoin. The Bloomberg Analyst Mike McGlone is one of them. He took to Twitter on Wednesday to express his thoughts about the most popular cryptocurrency.
The analyst strongly believes that Bitcoin will bounce back from the bear market. McGlone posted his thoughts on the recent Bitcoin price playouts on LinkedIn and Twitter. He addressed the tightening of the United States Federal Reserve as a determinant factor for the stock market’s direction. He added that Bitcoin is a ‘wild card’ that may defy the trend.
The Bloomberg Analyst likened Bitcoin to a wild card ready to perform well when stocks become low. He added that Bitcoin is evolving to be more like gold and bonds. The report shows that while Bitcoin will be more like gold and treasury bonds, Ether may be more like stocks.
BTC Will Benefit From Federal Reserves’ Increase In Interest Rate
It is not yet clear when the quantitative tightening of the Federal Reserves will be suspended. However, economists forecasted the endpoint to begin sometime in 2023. This statement is according to an August article published by Bloomberg.
The quantitative tightening of federal reserves started in the middle of an interest rate increase throughout the year 2022. The term quantitative tightening is a monetary policy tool employed by Central Banks to put money supply and liquidity in check and cut down spending on stocks and others.
The most recent increase in interest rates accounted for a 75 basis point increase on July 27. It is worth noting that the BTC price rose above $22,000 in July after the Federal Reserve added another significant interest rate increase.
The rise in BTC as interest rates increased could be the bases of McGlone’s assertion that Bitcoin will benefit from the forecasted recession.
Economists Predict An Increase Cn Crypto-Equity Correlation
Not minding Bloomberg’s strong standpoint, other analysts believe Bitcoin is now more like the stock market than before.
An expert said the relationship between the S and P 500 index and BTC tends to be 100%. Some IMF economists claimed to foresee a 10-fold increase in crypto-equity market correlation in some parts of the world.
According to McGlone, Bitcoin will likely move from a risk-on to a risk-off asset in the second half of 2022. This is because the macroeconomic domain is tending rapidly towards a recession. He added that the crypto market eliminated most speculative profligacies that played out 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 will benefit BTC.
Featured image from The BBC, chart from TradingView.com