Mike McGlone, a senior analyst at Bloomberg, said that cryptocurrencies will overtake commodities in the coming years. Bitcoin master talks about two assets that will make the difference up to 10x.
These two will multiply commodities by 10 over the course of ten years
Mike McGlone said that by the end of the year, the Fed will stop interest rate hikes and therefore Bitcoin will rally. He also predicted that the commodity market will cool over the next year. According to the crypto phenomenon, Bitcoin and gold will widen the difference up to 10 times in this process.
McGlone said the Fed’s aggressive monetary tightening is nearing its end. The Fed announced its third consecutive rate hike of 75 basis points last week. According to reports, the federal funds rate could reach 4.3% by the end of 2022 and 4.6% by early 2023. Analysts are forecasting a 75 basis point increase by November and a 50 basis point increase in December. Mike McGlone, senior commodity strategist at Bloomberg, commented on the situation:
The number of rate hikes by central banks is at an all-time high as the global recession approaches. Deflationary effects from lower commodity and risk asset prices may be the only way out that should support the price of gold and its digital counterpart, Bitcoin.
Bitcoin master confident that rally will come after pullback
But McGlone is confident that after this significant pullback, Bitcoin and other cryptocurrencies will continue to trend rapidly once the Fed’s tightening cycle ends. McGlone adds:
Commodities had a terrible decade, while Bitcoin had an exceptional decade. The higher price treatment could be stronger than ever in 2022 and support the cryptocurrency. Notably, compared to most commodities, the risk-to-reward could be leaning towards Bitcoin continuing its long-term upward trajectory as Federal Reserve tightening nears the end of the game.
Commodities and Bitcoin
So far in 2022, commodities and BTC have moved in opposite directions. Commodity prices skyrocketed as a result of Russia’s invasion of Ukraine. On the other hand, significant losses have occurred for Bitcoin and the larger crypto market. Since reaching the ATH level of $69,000 in November last year, the BTC price has fallen by over 70%.
But McGlone says that as time goes on, cryptocurrencies like Bitcoin will gain popularity as commodities lose ground. The analyst added that the Fed’s aggressive monetary tightening and supply-demand cycle will cause commodities to depreciate:
The lowest ever volatility in the cryptocurrency market compared to the Bloomberg Commodity Index (BCOM) could herald the return of Bitcoin’s trend to outperform. Unique compared to commodities is the cryptocurrency’s 260-day volatility hitting new lows. On any past indicator, Bitcoin volatility is more likely than commodities to recover as the cryptocurrency heads to new highs.
Bitcoin and gold will do 10x better
The Bloomberg analyst is confident that Bitcoin will outperform in the long run to become a “high beta version of gold and US Treasuries.” In his own words:
The bitcoin-gold ratio is at around 10x, first reached in 2017. In a rapidly digitizing world, benchmark crypto is the best competitor to legacy protection.
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