Bloomberg's McGlone Forecasts Bitcoin to Dominate in Era of Rising Interest Rates

Bitcoin could be uniquely positioned to thrive in an environment of rising interest rates, according to Mike McGlone, a senior commodity strategist at Bloomberg Intelligence. 

In a recent analysis, McGlone stated that Bitcoin's 24/7 trading ability and its historical performance make it a strong candidate for investment, particularly as the Federal Reserve is signaling tightening monetary policies. 

His comments come at a time when the financial world is keenly watching the Fed's next moves.

New paradigm for Bitcoin

McGlone pointed to the Bitcoin 20-week moving average, stating that its current trends could have implications for all risk assets, including traditional equities. He noted that the cryptocurrency's performance could signal future liquidity and a speculative direction on the broader markets.

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According to McGlone, the federal funds futures one-year (FF13) rate is above 5%, indicating limited prospects for liquidity easing from the Fed. 

He emphasized that Bitcoin demonstrated a similar pattern at the start of 2022, aligning with futures pricing for the current tightening cycle. However, McGlone also cautioned that the rapid ascent of the federal funds rate from zero to 5.25% might pose challenges to all risk assets, including Bitcoin.

Era of rising interest rates

The Federal Reserve has indicated that interest rates are unlikely to be cut before Q2 2024, maintaining a "higher-for-longer" mantra.

The majority of economists predict that the central bank will hold the federal funds rate at the current 5.25%-5.50% range in its next policy meeting, but others believe at least one more hike may occur before the year's end, Fortune reports.