Contrary to popular belief, the two largest cryptocurrencies bitcoin (BTC) and ethereum (ETH) could benefit from a tightening of monetary policy from the US Federal Reserve (Fed), Mike McGlone has argued in a new note.
According to McGlone, who is the Bloomberg Intelligence’s Senior Commodity Strategist, rising risk assets in 2022 could “embolden” a Fed that is “facing the greatest inflation in four decades.”
He added that although crypto assets in general are among the most speculative assets in the world, the original cryptocurrency – bitcoin – is rapidly becoming “the world's digital reserve asset.”
Further, McGlone argued that any drop in stock prices would be “a top force to shift the Fed back to easing,” which in turn would support the bitcoin price, given its status as the world’s preferred digital store-of-value.
“A top force to stop central-bank restraint is a decline in the stock market, with implications for cryptos. In most scenarios, Bitcoin may come out ahead,” McGlone noted.
In terms of chart technicals, the Bloomberg strategist added that bitcoin and ethereum have “solid” price support around USD 30,000 and USD 2,000, respectively, and that he expects the two largest cryptos to “remain dominant and continue advancing” through 2022.
And while McGlone admitted that sharp downside moves could put those key support levels in play, he said it is “unlikely” to happen.
“What's more probable, we think, is Bitcoin heading toward [USD] 100,000 and Ethereum breaching [USD] 5,000 resistance,” the commodity strategist wrote.
Expressing a similar sentiment as McGlone, although slightly more bearish for the short-term, is former BitMEX boss Arthur Hayes, who wrote in a blog post today that the only way crypto markets can move
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