Despite the ongoing bear market and the drop in the bitcoin price, some analysts still maintain their confidence in bitcoin. 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 firmly believes that Bitcoin will bounce back from the bear market. McGlone recently posted his thoughts on the bitcoin price on LinkedIn and Twitter. He addressed the tightening of the United States Federal Reserve as a determining factor for the direction of the stock market. He added that bitcoin is a ‘wild card’ that can defy the trend.
A Bloomberg analyst has compared bitcoin to a wild card that is poised to do well when the stock goes down. He said that bitcoin is evolving like gold and bonds. The report suggests that while bitcoin will be like gold and Treasury bonds, ether could be like a stock.
BTC Will Benefit From Federal Reserve Interest Rate Hike
It is not yet clear when the Federal Reserve’s quantitative tightening will be suspended. However, economists have predicted that the endpoint will begin in 2023. This statement is according to an August article published by Bloomberg.
The quantitative tightening of the federal reserves began in the midst of interest rate hikes throughout the year 2022. Quantitative tightening is a monetary policy tool employed by central banks to keep money supply and liquidity in check and to cut spending on stocks and others.
The most recent increase in interest rates accounted for an increase of 75 basis points on July 27. It is worth noting that the price of BTC surged above $22,000 in July following another significant interest rate hike by the Federal Reserve.
An increase in interest rates as BTC rises could be the basis for McGlone’s claim that bitcoin will benefit from the predicted downturn.
Economists predict a rise in the CN crypto-equity correlation
Ignoring Bloomberg’s strong outlook, other analysts believe that bitcoin is now more like a stock market than before.
One expert said the correlation between the S&P 500 index and BTC is 100%. Some IMF economists have forecast a 10-fold increase in the crypto-equity market correlation in some parts of the world.
According to McGloneBitcoin may move towards a risk-averse asset in the second half of 2022. This is because the macroeconomic domain is rapidly turning bearish. He added that the crypto market ended most of the speculative recklessness that played out in 2021.
The market is now ready for a new rally. McGlone also noted that a rise in interest rates could lead to a global deflationary slowdown, which would benefit BTC.
Featured image from The BBC, chart from TradingView.com