Bloomberg Analyst Says Bitcoin Likely To Transition To A Risk-Off Asset Soon• August 9, 2022 4:04 pm • Comments
As it is becoming clearer that the economy will likely enter a recession for the second half of 2022, assets such as Bitcoin and gold may soon become more attractive as potential alternative assets.
According to Mike McGlone, a senior commodity strategist at Bloomberg, Bitcoin may even transition to becoming a risk-off asset.
This would be quite impressive as other assets such as the stock market are typically considered risk-on assets, especially during a recession.
Additionally, the recent bear market within crypto seems to have given many investors confidence that the market has already bottomed out and is therefore ready for a fresh rally.
How I think about the investment world, in one chart… brazenly borrowed from @BitcoinMagazine Pro, by @DylanLeClair_ and @samjrule.
As liquidity ("Global M2") expands and contracts, so also do risk assets… especially #bitcoin (which is actually the ultimate risk off asset). pic.twitter.com/bnCC12LE4g
— Dr. Jeff Ross (Pleb counselor) (@VailshireCap) August 3, 2022
Bitcoin is likely to transition from a risk-on to a risk-off asset in the second half of 2022, as the macroeconomic environment is rapidly shifting towards a recession, said Mike McGlone, senior commodity strategist at Bloomberg, in a recent interview with Cointelegraph. McGlone predicted:
“ I see it transitioning to be more of a risk-off asset like bonds and gold, then less of a risk-on asset like the stock market.”
According to the analyst, the crypto market has flushed out most of the speculative excesses that marked 2021 and it is now ripe for a fresh rally.
McGlone also pointed out that the Fed’s aggressive hiking of interest rates will lead the global economy to a deflationary recession, which will ultimately favor Bitcoin:
“I fully expect we’re going to have a pretty severe recession globally, which probably will make Bitcoin shine […] along with gold and U.S. Treasury long bonds.”
As many crypto investors know, digital assets such as BTC and XRP are protected from inflation concerns that plague fiat currencies such as the USD.
As more and more large financial institutions seek alternatives to hedge their portfolio against the looming recession and inflation, it would only make sense that something like BTC would start to experience a new risk rating.
This may also be part of a larger macroeconomic cycle and the increasing ease of access to these new markets may also accelerate this trend.
Whether or not BTC has truly reached its bottom is something that only time will tell, but it seems that a few are already betting that it is.
#Bitcoin likely to transition to a #risk-off #asset in H2 2022, says Bloomberg analyst https://t.co/2oabFfbezEhttps://t.co/yeTUiTusLChttps://t.co/6cldso8ke2
— @Healthy Life Channel (@FpPernalete) August 9, 2022
Bitcoin on Monday rose as much as 4.2% to $24,241, the highest since the end of July. Other cryptocurrencies also rose, with Ether adding 5.6% at one point to reach $1,818.
That’s been the refrain all year, with both stocks and crypto moving in similar fashion.
The background is a hawkish Federal Reserve that’s bent on tamping down four-decade-high inflation, something that’s been the source of volatility for all manner of assets in 2022.
But whether equities and crypto have reached their lows is a question no one can call with any real certainty — bottoms are only perceptible after the fact, and it’s possible both revisit their lows later this year or even early next year.
Is the next Bitcoin bull run coming in the second half of 2022? https://t.co/miUWJuUU0y
— Cointelegraph (@Cointelegraph) August 8, 2022
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