The best risk-on asset in the past decade, Bitcoin, is in a process of transition. Senior Commodity Strategist for Bloomberg Intelligence, Mike McGlone, said in a recent interview with Kitco News’ “On The Spot”.
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This process is painful as crypto investors can confirm but could take the benchmark crypto to new highs. In the past 6 months, the price of Bitcoin dropped from an all-time high of $69,000 to its current levels of around $30,000.
In the short term, the pain has been more pronounced with Bitcoin recording 9 consecutive weeks in the red. McGlone believes the cryptocurrency and other risk-on assets are responding to the current macro-economic outlook.
The crypto market has experienced some of the best performance in global markets. The rally in the nascent asset class usually corresponds to 4 years cycles with parabolic bull runs followed by multi-year bear markets.
Many in the sector believe cryptocurrencies entered their bear phase or the “Crypto Winter”. The losses have been compounded by two factors: the beginning of economic tightening measures by the U.S. Federal Reserve, and the collapse of the Terra ecosystem.
In that sense, McGlone argued that Bitcoin and other cryptocurrencies must face the biggest losses as they recorded the largest gains. This process is called “Mean Reversion” when an asset trends in a direction and then reverses to a “mean” price or bottom.
On the latter, the Senior Commodity Strategist said it’s “hard” to calculate an exact price bottom. Bitcoin has been moving in tandem with the Nasdaq 100, and both recently hit their 100-week moving average when BTC’s price dropped to $30,000.
McGlone claims the trends seem to hit at further losses, but Bitcoin should “come out ahead”. This potential rally will be driven by “institutional bids”, as BTC continues to be adopted by worldwide institutions, and…
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