Hello everyone! The closer we get to the New Year, the more we want to recap and look ahead to the year 2023. Today, our oracle is Bloomberg Intelligence Senior Commodities Analyst Mike McGlone, who believes that a "warming period" is coming to the Bitcoin market. Already in the coming months, it looks like crypto is ready to resume its upward trend. According to McGlone, Bitcoin and Ethereum "have completed the bulk of their decline."
Fed ruling
Mike McGlone suggests that Bitcoin will resume its rise in price when "the Fed turns to easing policies." This could happen as early as 2023, at most as 2024. After that, Bitcoin will have a quick cure, as "what was resistance for Bitcoin vs. the Nasdaq 100 stock index at 1:1 may be transitioning to support."
We covered this aspect in great detail in our recent review of the annual report from JPMorgan:
“The U.S. Federal Reserve’s rate hikes and the balance sheet cuts the Federal Reserve has used since June, taking money out of financial markets in a desperate attempt to cool the economy and temper inflation.
The Federal Reserve’s actions shocked not only cryptocurrencies but also the fintech sector.”
The chart and the new BTC property
McGlone also shared a chart that he says indicates "crypto prices are escaping the stock index level in 4Q20, on the back of unprecedented fiscal and monetary stimulus."
The chart, first published by Mike McGlone on Dec. 19, 2022, says that what has been constant throughout most of the history of the benchmark cryptocurrency is "its declining relative risk vs. the stock index."
“At 2x,” the market strategist continues, “Bitcoin’s annual volatility at the end of 2022 compares with 4x at the end of 2021.”
In other words, despite all the negative news, according to unbiased metrics, Bitcoin is gradually gaining more stability, and it is noticed not only by analysts from Bloomberg.
Main conclusion
While Bitcoin is relatively cheap, the Bloomberg analyst predicts more than just its imminent reversal; McGlone also makes the far-reaching conclusion that Bitcoin is on its way to a benchmark digital reserve. Bitcoin's degree of volatility is gradually declining, and its independent status and cross-border nature in a world of all-versus-all sanctions may make it a unique protective asset.
Bloomberg’s senior commodity analyst added:
Next year may be about how much lower global economies fall. Risk vs. reward appears to argue against under-allocating or estimating the propensity for bitcoin to continue its trajectory toward becoming digital collateral.
If you are interested in general market analytics (where the crypto market has long been built-in) — we offer you two new reports as an organic addition: the final report from JPMorgan and the annual report from Huobi Research.
Stay tuned, read, and of course, please comment. Bye-bye!