After reaching an all-time high of $69K in November 2021, Bitcoin has been suffering from intense bearish pressure. The cryptocurrency has also encountered some difficulties over the last 24 hours as it lost the $19,000 mark.
Therefore, the coming days will probably be very important for BTC in the short term.
A Mid-Year Crisis
The trade analyst forecasts that despite challenges for high-risk assets, Bitcoin will make a robust recovery from the current market.
Given the outlook for the crypto asset midyear prognosis, Bloomberg analyst Mike McGlone has deemed Bitcoin (BTC) a “wild card” that is “ready” to surpass once mainstream stocks have reached their bottom.
McGlone explained in a post on Linkedin and Twitter on September 7 that the direction of the stock market would probably be determined by the United States (U.S.) Federal Reserve’s tightening and Bitcoin remains a “dark horse candidate” that could buck the trend.
“Bitcoin is a power play that is more likely to outperform when stocks hit their downtrend, but it is also transitioning to resemble gold and bonds.”
In a report published on September 7th, the commodities strategist provided additional information and indicated that despite a “major barrier” facing the high-risk assets, Bitcoin was poised to make a dramatic recovery from the bear market.
“The fed funds index often leans toward reductions over time, and when it does, Bitcoin is positioned to benefit most”.
BTC In Congruence With Gold?
According to the report, Ethereum (ETH) has a better association with stocks, whereas Bitcoin tends to move in the same direction as treasury bonds and gold.
In addition to multiple significant interest rate increases during 2022, the Federal Reserve has escalated its quantitative tightening. The most recent rate jump was a 75 basis point increase on July 27.
Potential Game Reversal in 2023
Bloomberg reported in August that although the specific timing of the Fed’s quantitative tightening is unknown, some economists predict the endgame would be apparent by 2023.
Quantitative tightening is a contractionary monetary policy instrument that central banks employ to lower the level of money supply and liquidity in an economy, which can lower spending across markets, such as stocks.
However, despite Bloomberg’s upbeat assessment, other analysts think that there is now a stronger correlation between Bitcoin and the equity markets- something which was not seen before.
Additionally, well-known trade analyst Michal van de Poppe recently claimed that the correlation between the S&P 500 index and Bitcoin was getting close to 100%, and several IMF economists asserted that in some parts of the world, the correlation between cryptocurrencies and equity markets had increased by 10X.