According to Bloomberg commodity strategist Mike McGlone, while the Federal Reserve signaled that it would tighten monetary policy in 2022, there is a good chance that Bitcoin will still be on top because investors recognize its value and status as a digital reserve asset.
Bloomberg’s Crypto Outlook January edition described the Federal Reserve’s plan for raising interest rates in 2022, as a potential “win-win” scenario for Bitcoin and the stock market. This is due to the fact that Bitcoin is gaining popularity as an inflation hedge.
McGlone stated that while stretched markets are becoming more common, commodities and Bitcoin seem to be early reversion leaders. “It’s all about bull-market longevity, and we see benchmark crypto emerging ahead.”
Minutes of the Federal Reserve’s December policy session revealed Wednesday that central bankers are more ready to reduce their stimulus support than they had previously anticipated. At least for now, the plan includes three interest rate increases in 2022, accompanied by a reduction of the Fed’s balance, currently at $8.3 trillion in Treasurys, mortgage-backed securities, and nearly $8.3 trillion in Treasurys.
The markets may be reacting too quickly in the short-term, but it is difficult to overestimate the Fed minutes’ hawkishness. While QE was reduced with 3 hikes, it was OK to have 3 hikes plus accelerated QT.
Alex Kruger (@krugermacro), January 6, 2022
McGlone believes that Bitcoin has the unique ability to outperform in these environments, even though stimulus reduction is often considered a negative for risk assets. This broad category includes equities, cryptocurrencies and equities.
“Cryptos top the list of risky and speculative assets. It helps the Fed fight inflation by helping risk assets fall. Bitcoin could be the primary beneficiary of that scenario, becoming a global reserve asset.
The Bloomberg analyst stated that he expected the “enduring trio” of cryptocurrency markets, namely Bitcoin, Ether, and dollar-pegged steadycoins, to continue their dominance throughout the year.
BTC/USD has been in a clear downtrend since the release of FOMC minutes.
Cointelegraph Markets Pro and TradingView data showed that Bitcoin’s value fell sharply on Wednesday after the release of minutes from the Federal Open Market Committee meeting. The price of the flagship cryptocurrency fell below $43,000 for only the second time since September, and is currently down 8.8% in the last 24 hours.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.