Fed’s expected tightening of the bond-buying program and interest rate hikes could present a macroeconomic environment likely to favour top cryptocurrencies in 2022, according to Bloomberg Intelligence’s senior commodity strategist Mike McGlone.
McGlone wrote in the Bloomberg Crypto Outlook, December 2021. reportAccording to him, the market’s deflationary forces could give Bitcoin (and other top crypto assets) a new boost.
The analyst believes that cryptocurrency will continue outperforming equities by showing divergent strength as we approach the end of this year.
Bitcoin: The bullish case in 2022
McGlone’s bullish scenario for the benchmark cryptocurrency is outlined in the Global Cryptocurrency Outlook report, in which he notes that China’s ban on crypto has set up the sector for broader adoption in the US. McGlone believes the US can provide a regulatory framework that supports the industry and further gains in price movements.
According to the analyst, the rapid growth witnessed around revolutionary crypto-related technologies like NFTs and crypto dollars could see a wider embrace in the US, developments likely to cement Bitcoin’s status as a digital store of value and see its value rise even further.
He points out the US Federal Reserve’s outlook on inflation and the potential for market pressure on bond yields as possible catalysts for central bank liquidity, and which in turn could see Bitcoin emerge as the “primary beneficiary.”
McGlone says Bitcoin could find itself in a “win-win” situation if the stock market drops as a result of a reversal to the Fed’s expected tightening in 2022 happens. McGlone believes that BTC could face headwinds if stocks fall, but that if this happens, new moves towards central bank liquidity could mitigate yield gains and benefit crypto.
$100,000 #Bitcoin, $50 #Oil, $2,000 #Gold? 2022 Outlook in 5 Charts – Peaking commodities and the declining yield on the Treasury long bond point to risks of reviving deflationary forces in 2022, with positive ramifications on Bitcoin and gold. pic.twitter.com/j3VNAOCwuz
— Mike McGlone (@mikemcglone11) December 9, 2021
“Some normalization in stock-market returns and a continued decline in US Treasury bond yields may shine on Bitcoin and Ethereum in portfolios,” the Bloomberg analyst wrote.
While the strategist states that an asset’s past performance does not necessarily become an indicator of its future outlook, any massive outperformance by a new asset class is always followed by greater investment from earlier doubters.
This is the scenario that investment managers could see in 2022. They will be looking to minimize their risk by investing in crypto allocations.
Bitcoin is currently trading at $48,845, approximately 24% down over the past 30 and 30% lower than its peak price of $69,000. But, the BTC prices are almost 160% higher than the previous year.