Bitcoin could outperform stocks in 2022 amid Fed tightening — Bloomberg analyst

Share This Post

The FOMC minutes on Wednesday revealed that policymakers intend to step up their fight against inflation in 2022.

The Federal Reserve’s signaling for tighter monetary policy in 2022 could provide short-term headwinds for risk assets such as stocks and cryptocurrency, but there’s a good chance that Bitcoin (BTC) still comes out on top as investors recognize its value as a digital reserve asset, according to Bloomberg commodity strategist Mike McGlone. 

The January edition of Bloomberg’s Crypto Outlook described the Federal Reserve’s plan to raise interest rates in 2022 as a possible “win-win scenario for Bitcoin [versus] the stock market.” The reasons stem from the fact that the S&P 500 Index is currently the most overextended above its 60-month moving average in over two decades and that Bitcoin is seeing growing mainstream appeal as an inflation hedge.

“Stretched markets have become common, but commodities and Bitcoin appear to be early reversion leaders,” McGlone said. “It’s a question of bull-market duration, and we see the benchmark crypto coming out ahead.”

Minutes from the Federal Reserve’s December policy meeting revealed on Wednesday that central bankers are ready to aggressively curb their stimulus support more quickly than previously expected. The plan, at least for now, includes three interest rate hikes in 2022 accompanied by a reduction in the Fed’s balance sheet, which currently stands at nearly $8.3 trillion in Treasurys and mortgage-backed securities.

Although stimulus reduction is usually considered negative for risk assets, a broad category that includes equities and cryptocurrencies, McGlone believes Bitcoin is in a unique position to outperform in this environment:

“Cryptos are tops among the risky and speculative. If risk assets decline, it helps the Fed’s inflation fight. Becoming a global reserve asset, Bitcoin may be a primary beneficiary in that scenario.”

Within the broader cryptocurrency market, the Bloomberg analyst said he expects the “enduring trio” — namely Bitcoin, Ether (ETH) and dollar-pegged stablecoins — to maintain dominance throughout the year. 

BTC/USD is in a clear downtrend that has accelerated following the release of the FOMC minutes. 

Data from Cointelegraph Markets Pro and TradingView showed a sharp decline in the value of Bitcoin on Wednesday following the release of the Federal Open Market Committee meeting minutes. The flagship cryptocurrency plunged below $43,000 for the first time since September and is currently down 8% over the past 24 hours.

Read Entire Article
spot_img
- Advertisement -spot_img

Related Posts

Former Soccer Star Ronaldinho: Time for Crypto to Go Mainstream

In a now-deleted message posted on June 23 on X, former Brazilian soccer superstar Ronaldo de Assis Moreira, known as Ronaldinho, declared his support for crypto, stressing that it was time for this

Julian Assange free from prison – leaves UK for Saipan after striking US deal

Julian Assange, the founder of WikiLeaks, has been released from Belmarsh prison in the UK after reaching a plea deal with US authorities, marking a significant development in his long-running legal

Galaxy Digital Predicts Minimal Bitcoin Sell Pressure From Mt. Gox Resolution

In an analysis shared via X, Alex Thorn, the head of research at Galaxy Digital, has projected that the Bitcoin market may face less sell pressure than anticipated from the resolution of the Mt Gox

Don’t Fret The DOGE Dip: Analyst Predicts Big Rebound To $2

The cryptocurrency market has been battered by recent events, with Bitcoin leading the decline and dragging many altcoins down with it However, Dogecoin (DOGE), the memecoin often dismissed as a

Pepe Price Prediction: Pepe Pumps 13% As Analysts Say This Meme Coin Rival Might Explode Exponentially

The Pepe price surged 13% in the last 24 hours to trade at $000001170 as of 02:33 am EST on trading volume that skyrocketed 78%

Spot Bitcoin ETFs Record Worst Outflows Since April After $1.3B Leave Their Reserves In 2 Weeks

US spot Bitcoin ETFs (exchange-traded funds) saw nearly $13 billion leave their reserves collectively over the last 2 weeks, marking the largest spate of outflows