A Bloomberg analyst calls Bitcoin a wild card that could significantly outperform the market

By: Ikenna Odunze

September 8, 2022 9:13 AM

Despite negative trends for high-risk assets, the commodity strategist predicts Bitcoin will make a strong comeback from its recent bear market.

Mike McGlone, a Bloomberg analyst, recently described Bitcoin (BTC) as a "wild card" that is "ripe" to outperform once traditional stocks finally bottom.

In a Linkedin and Twitter post dated September 7th, McGlone explained that while Fed tightening is likely to determine the direction of the stock market, Bitcoin remains a "wild card" that could turn a hump the trend and explains:

"Bitcoin is a wild card which is poised to outperform once stocks bottom, but also is gradually becoming more like gold and bonds."

Despite "strong headwinds," Bitcoin is set for a strong rebound from the bear market, as the commodities strategist explained in a report published on September 7. assets that carry some degree of danger.

"For Bitcoin, it's usually just a matter of time for the fed funds gauge to flip toward cuts, as one analyst put it."

Ethereum (ETH) "could have a higher correlation with stocks," the report says, while Bitcoin (BTC) would trend similarly to Treasuries and Gold.

The Federal Reserve is currently engaged in the largest quantitative tightening by means of a series of large rate hikes throughout 2022, with the most recent increase occurring on July 27th (by 75 basis points).

"In this edition of Macro in Five Charts, we take a look at the price of crude oil, other commodities, stocks, bonds, and bitcoin to see if the price of crude oil is resuming its long-term bear market and refueling the T-bond bull. Stocks may be transformed into a market that declines on bad news and rises on good if the Federal Reserve begins tightening monetary policy as global GDP turns negative.

According to a Bloomberg article from August, some economists predicted that the end point of the Fed's quantitative tightening would begin "sometime in 2023."

Reducing the money supply and liquidity in an economy, also known as "quantitative tightening," is a contractionary monetary policy tool used by central banks to slow the economy and prevent inflation.

Even though Bloomberg is optimistic, there are those who believe that Bitcoin and the stock market are more linked than ever before.

Recently, Michal van de Poppe stated that the S&P 500 Index was highly correlated with Bitcoin (BTC), and several IMF economists claimed to have observed a tenfold increase in the correlation between cryptocurrencies and stock markets in some regions of the world.