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The bitcoin price, down around 70% from its all-time highs, has found a floor at around $20,000 per bitcoin. The ethereum price has seen a similar decline—though some think it could be about to blow bitcoin out of the water.
Now, as expectations the Federal Reserve could be about to swing dovish in its flight against inflation reach fever pitch, one closely-watched analyst has predicted the price of bitcoin and ethereum could be about to “outperform most major assets.”
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“When the ebbing economic tide turns, we see the propensity resuming for bitcoin, ethereum and the Bloomberg Galaxy Crypto Index to outperform most major assets,” Mike McGlone, senior commodity strategist at Bloomberg Intelligence, wrote in a report this week, noting that since 2014, October has been “the best month for bitcoin,” with the bitcoin price averaging gains of about 20%.
McGlone pointed to an “enduring peak” in commodity prices—”the lone major asset class to rally in the first half of 2022″—as a potential bottom signal for bitcoin even as the U.S. Federal Reserve and other central banks continue to eke out interest rate hikes.
“Rate hikes by more central banks than ever is a strong headwind,” McGlone wrote, “but it’s the potential for the benchmark crypto to shift toward becoming a risk-off asset, like gold and U.S. Treasurys, that may play out in [the second half of 2022].”
The Federal Reserve has this year embarked on a series of interest rate hikes in its battle to drive down soaring inflation. On Friday, the latest U.S. jobs report will give the clearest sign yet of whether the Fed’s rate hikes have cooled the economy.
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“The current optimism is akin to what the stock market had before August’s consumer price inflation (CPI) announcement, where they expected inflation to slow down from July and thought the Fed would dial down on rate hikes,” Yuya Hasegawa, crypto market analyst at Bitbank, wrote in an emailed note, warning the “current optimism could be betrayed as a couple of Fed members seem to be ready to compromise economic activities to some extent in order to bring down inflation.”
Meanwhile, some crypto market watchers are feeling bullish about ethereum following its long-await, energy-saving merge upgrade, which was completed last month.
“Ethereum’s transition to proof of stake may be helping it build a base above $1,000,” McGlone wrote, adding, “the nascent technology and more volatile No. 2 crypto has a tendency to outperform the stock index on the way up, but the merge may mark an inflection point of ethereum also beating the Nasdaq 100 when it declines.”