- The Fed’s attitude towards risky assets leads to the fact that the most speculative assets, such as meme coins, are withdrawn from circulation.
- Bloomberg Intelligence senior commodity strategist Mike McGlone has predicted that waning volatility will give Bitcoin and Ethereum an edge over the stock markets.
While the crypto markets have suffered a lot since the beginning of May, bearish conditions can only last for a limited time, and there are signs that the downturn is coming to an end or at least easing. In a recent interview with Yahoo Finance, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, expressed his belief that the former will come out on top even if the emerging crypto markets suffer alongside the S&P 500.
The Fed’s anti-inflation measures have fueled the recent crash
McGlone explained that the current development of the stock and crypto markets was caused by the Federal Reserve’s fight against inflation. The Bloomberg strategist expects this trend to continue. He noted that crypto-assets were among the most risky assets, and the most speculative of them, including meme-coins like Doge, are being withdrawn from circulation.
“The Fed sells calls. It needs a decline in risk assets to reduce people’s buying opportunities, otherwise inflation will not go down, and some of the riskiest, most speculative investments have been cryptocurrencies. That’s why we’re finally removing things like the Dogecoins and the Shiba Inus.“
He added that the tokens that will survive this purge are those that have a proven infrastructure and products that are actually used by the people. He cited use cases such as Ethereum’s involvement in NFTs and tokenization. Accordingly, he predicted that Bitcoin and Ethereum would emerge stronger in the end.
McGlone predicted a greater participation of users in the two tokens, explaining a situation where investors did not want to miss the revolution. The revolution in question was also related to the fact that the currently lucrative Amazon shares in 2009 had a similar level of volatility as Bitcoin currently has. The 260-Day Volatility of Bitcoin be on May 13 at 70%, about the same ratio as Amazon shares in 2009.
„. keep in mind that if the stock market continues to fall… Bitcoin and Ethereum will fall, but they will be ahead, and the key factor that I can point out is that the volatility of these emerging crypto assets, especially Bitcoin, has continued to fall compared to the stock market. It was the same with Amazon when it came on the market“, the commodity strategist told Yahoo Finance.
Overall, McGlone believes that Bitcoin will come out on top after the Fed deals with inflation, as the leading crypto token becomes a global digital security.