Bitcoin is a ‘wild card’ set to outperform – Bloomberg analyst
Bloomberg analyst Mike McGlone has labeled Bitcoin (BTC) a “wild card” that is “ripe” to outperform when traditional stocks finally bottom out.
In a Sept. 7 post on Linkedin and Twitter, McGlone explained that while tightening by the United States (US) Federal Reserve is likely to determine the direction of the stock market, Bitcoin remains a “wildcard” that could buck the trend, saying:
“Bitcoin is a wild card that is more ripe to outperform when stocks bottom out, but is transitioning to become more like gold and bonds.”
The commodities strategist shared more details in a Sept. 7 report, noting that Bitcoin was poised to rebound strongly from the bear market despite a “strong headwind” against high-risk assets:
“It’s usually a matter of time for the fed funds gauge to turn toward cuts, and when it does, Bitcoin is poised to be a primary beneficiary.”
The report notes that while Bitcoin would follow a similar trend to Treasuries and Gold, Ethereum (ETH) “may have a higher correlation with stocks.”
The Federal Reserve’s increased quantitative easing comes amid several major interest rate hikes through 2022, with the latest peak accounting for a 75 basis point increase on July 27.
Macro in five charts: Crude Oil, Commodities, Stocks, Bonds, Bitcoin – #Crude oil could resume a sustained bear market and fuel the T-bond bull. #FederalReserve austerity when global GDP turns negative can help transmogrify #stock to go down on bad news and up on good. pic.twitter.com/KZEWsZyI8h
— Mike McGlone (@mikemcglone11) 7 September 2022
While it is not known exactly when the Fed’s quantitative easing will end, some economists predicted the tipping point will begin “sometime in 2023,” according to a Bloomberg article published in August.
Quantitative tightening is a contractionary monetary policy tool used by central banks to reduce the level of money supply and liquidity in an economy, which can reduce spending across markets, such as stocks.
Related: Bitcoin likely to transition to a risk-off asset in H2 2022, Bloomberg analyst says
But despite Bloomberg’s bullish opinion, other experts believe that Bitcoin and the stock markets have actually become more correlated than before.
Cointelegraph contributor Michaël van de Poppe recently said that the correlation between the S&P 500 index and BTC was approaching 100%, while a number of IMF economists claimed to have seen a tenfold increase in the correlation between crypto and stock markets in some regions of the world.
