Bloomberg analyst predicts that the "FED sledgehammer" will continue to crush the value of bitcoin and ether

By: Ikenna Odunze

September 21, 2022 6:29 AM

Mike McGlone speculates that, given the aggressive stance taken by the Fed, ETH could drop to $1,000 or even lower as a result of the merger's buy the rumor, sell the news event.

According to Bloomberg analyst Mike McGlone, the Federal Reserve's "sledgehammer" inflation policy will cause Bitcoin (BTC) and Ether (ETH) prices to fall even further before they reach new record highs in 2025.

Ahead of the Fed's latest rate hike to be announced this week, the market expects a minimum hike of 75 basis points, although some fear it could reach 100 basis points, marking the largest rate hike in\s40 would represent years.

On Saturday, McGlone, a senior commodities strategist at Bloomberg Intelligence, spoke with financial news outlet Kitco News and suggested that more market battles were on the horizon for Bitcoin, Ethereum, and the crypto sector in general as Fed actions continued to weigh on investor confidence. Throughout 2018, cryptocurrencies have been under intense pressure from the Federal Reserve.

Over the past week, Bitcoin has lost 13.4 percent of its value, dropping to around $19,350 as of this writing, while Ethereum has lost a whopping 20.7 percent, dropping to around $1,350.

In particular, the 20% decline in ETH's price since the long-awaited and anticipated merger on September 15 has sparked debate.

Due to the "buy the rumor, sell the news" nature of the impending major network upgrade, McGlone predicts that ETH will rise to $1,000 or even slightly higher before it begins to fall, especially considering the Fed's aggressive stance thus far and likely for the rest of the year.

McGlone said, "I fear [the merger] has been hyped too much," and that the drop in ETH's price is consistent with a sizable macroeconomic supply. due to the fact that a downturn in the market has hit all forms of speculation.

During the interview, McGlone even went so far as to predict that the recent rate hike could cause a fortune crash worse than the collapse of the 2008 housing bubble:

Somehow, "I think it's going to be worse than the 2008 correction, worse than the Great Financial Crisis."

"The Fed eased in 2007, and then they pumped a lot of money into the system. He went on to say, "They can't do that anymore.

Although McGlone is very bullish on ETH's long-term potential for institutional adoption, he has also hinted that BTC will rebound strongly and hit a new all-time high of $100,000 by 2025, so there is a hint of Hopium in there somewhere.

The opposite is true; other analysts and pundits have shared McGlone's short-term pessimism. The recent Fed announcement will be critical because of "what it could mean for the direction of the stock market for the rest of the year," according to Kristina Hooper, chief strategist for global markets at Invesco, who spoke to The New York Times on Monday.

"The Fed has been the key driver of the stock market this year, and it has been mostly bad," he said.

The CEO of Ark Invest, Cathie Wood, also voiced concern about the possibility of deflation as a result of the Fed's rate hikes last week, tweeting on Sunday, "Fed is solving supply chain issues by crushing demand and, in my view, unleashing deflation, setting it up for a major pivot."