The commodity strategist has pegged Bitcoin to rebound strongly from the bear market despite headwinds for high-risk assets.
Bloomberg analyst Mike McGlone has labeled Bitcoin (BTC) a “wild card” which is “ripe” to outperform once traditional stocks finally bottom out.
In a Sept.7 post on Linkedin and Twitter, McGlone explained that while the United States (U.S.) Federal Reserve tightening will likely determine the direction of the stock market, Bitcoin remains a “wildcard” that could buck the trend, stating:
“Bitcoin is a wild card that’s more ripe to outperform when stocks bottom, but transitioning to be more like gold and bonds.”
The commodities strategist shared more details in a Sept. 7 report, which noted that Bitcoin was primed to rebound strongly from the bear market despite a “strong headwind” toward high-risk assets:
“It’s typically a matter of time for the fed funds gauge to flip 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 treasury bonds and gold, Ethereum (ETH) “may have a higher correlation with stocks.”
The Federal Reserve’s increased quantitative tightening comes amid several major interest rate hikes throughout 2022, with the most recent spike accounting for a 75 basis points increase on Jul. 27.
While it is not known exactly when the Fed’s quantitative tightening will end, some economists predicted the endpoint will begin “at some point in 2023” according to a Bloomberg article published in August.
Quantitative tightening is a contractionary monetary policy tool that is 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.
But despite Bloomberg’s bullish take, other experts believe that Bitcoin and equity markets have actually become more correlated than before.
Cointelegraph contributor Michaël van de Poppe recently said the correlation between the S&P 500 index and BTC was approaching 100%, while a number of IMF economists claimed to have seen a 10-fold increase in correlation between crypto and equity markets in some regions of the world.