Bloomberg’s senior commodity strategist thinks that the Federal Reserve’s planned interest rate hikes could help propel Bitcoin (BTC) to new all-time highs.
In a new interview, analyst Mike McGlone discusses how the perfect storm of geopolitical tensions, soaring oil prices, and domestic monetary policies are setting the stage for a major economic recession.
“This is the most significant spark for recession I’ve ever seen. I’ve never seen anything this severe.
The Fed’s tightening, the stock market’s already corrected 10%, 15%. And the Fed, the market’s still priced for six 25-basis points hikes in the next year.
When this happened in 2018 when the market already dropped 15% or so, rates were hiked 4 times… It’s lose-lose for risk assets, which is where Bitcoin fits into that space.”
The analyst says that in the wake of markets selling off in most asset classes, the fact Bitcoin is dropping less than the Nasdaq could be a sign that BTC is separating from the pack.
“When you see the stock market dropping 1%, 2%, 3% – Bitcoin will drop. But the bottom line is it’s already showing divergent strength.
Just look at Bitcoin on the year. I see Bitcoin’s down 15%. The Nasdaq’s down 17%. That’s significant because Bitcoin typically trades about three to four times the volatility of the Nasdaq.
Bitcoin should be down about 3x the Nasdaq.”
McGlone concludes his analysis by saying that Bitcoin appears to be in the process of transitioning into a risk-off asset and eventually will top the $100,000 valuation.
“What I see it’s doing is shifting from risk-on to risk-off. It might get to $30,000, but if it goes there imagine where the stock market will be.
It can easily correct 30%, 40% in the stock market, it’s happened in history. Then I think Bitcoin comes out ahead.
I still think based on supply and demand and adoption trends, it’s just a matter of time before it gets to $100,000. This could be part of that base-forming period.”
Bitcoin has been on a steady downtrend over the past week, dropping 16.5% from a high of $44,790 on March 2nd to as low as $37,387 on March 7th. BTC is currently down 1.48% on the day and trading for $38,380 at time of writing.
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