The best risky asset of the last decade, Bitcoin, is in the process of transforming. Mike McGlone, chief commodity strategist at Bloomberg Intelligence, said in a recent interview with Kitco News’ On the Spot.
This process is painful as cryptocurrency investors can confirm it but it can take crypto-standard to new heights. In the past six months, the bitcoin price has fallen from an all-time high of $69,000 to its current levels of around $30,000.
In the short term, the pain was more pronounced with Bitcoin posting 9 consecutive weeks in the red. McGlone believes that cryptocurrency and other risky assets respond to current macroeconomic forecasts.
The crypto market has seen some of the best performance in the global markets. A rally in an emerging asset class typically corresponds to 4-year cycles with equivalent uptrends followed by multi-year bear markets.
Many in this sector believe that cryptocurrency has entered a bear phase, or “crypto winter.” The losses were exacerbated by two factors: the onset of economic tightening measures by the US Federal Reserve, and the collapse of the Terra ecosystem.
In this sense, McGlone argued that Bitcoin and other cryptocurrencies should face the biggest losses as they posted the biggest gains. This process is called “averaging reversal” when an asset is trending and then reverses to an “average” price or bottom.
Regarding the latter, the chief commodity strategist said it was “difficult” to calculate an exact price bottom. Bitcoin has been moving in tandem with the Nasdaq 100, both of whom recently reached the 100-week moving average when the price of BTC fell to $30,000.
McGlone claims that the trend appears to be taking more losses, but Bitcoin must “move on.” This potential rally will be driven by “institutional bidding,” as BTC continues to be adopted by global institutions, and by the “inelastic supply” of the cryptocurrency.
What will take Bitcoin to $100K
Despite its recent growth, McGlone claims that a small portion of investment firms include BTC as part of their portfolio. This may change in the coming years, as Bitcoin becomes a “global security” and starts a new rally towards $100,000 by 2024.
Regarding the future outlook for BTC price and a possible bottom, McGlone added:
I think $30,000 is a very good pivot support in Bitcoin. It basically needs stocks to keep dropping in order to push them lower. But what I feel is pumping (BTC) into good support and I fully anticipate, it could reach $20,000, but I doubt that, within the next couple of years, it will return to $100,000.
The current downtrend might be a good thing for some of the strongest projects in the crypto industry. This will help remove speculative assets and leave those projects with solid fundamentals.
These projects may be able to continue to gain market shares from traditional markets. As the expert said, the cryptocurrency market accounted for only 0.5% of the global stock market capitalization. Now it is about 1%.
In the coming years, with the economy turning into recession and stocks trending lower, McGlone believes that bitcoin and gold will be two of the best assets to hold. However, the precious metal could lose market share in favor of the number one cryptocurrency.
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At the time of writing, BTC price is trading at $29,700 with sideways movement in the last 24 hours.