Bitcoin is one of the first digital currencies that has proven to be a reliable store of value and an efficient payment system. Despite its volatility, many financial experts believe it will continue to outperform stocks in 2022 amid rising interest rates from the Federal Reserve.
Bitcoin could outperform stocks in 2022 amid Fed tightening — Bloomberg analyst. As the Federal Reserve tightens, Bitcoin is expected to gain momentum. Read more in detail here: when to buy bitcoin 2021.
According to Bloomberg commodity strategist Mike McGlone, the Federal Reserve’s signaling for tighter monetary policy in 2022 may provide short-term headwinds for risk assets like stocks and cryptocurrency, but there’s a good chance that Bitcoin (BTC) will still come out on top as investors recognize its value as a digital reserve asset.
The Federal Reserve’s proposal to increase interest rates in 2022 was portrayed in the January edition of Bloomberg’s Crypto Outlook as a probable “win-win situation for Bitcoin [against] the stock market.” The reasons for this are that the S&P 500 Index is now the most overextended above its 60-month moving average in over two decades, and Bitcoin is gaining popularity as an inflation hedge.
“Stretched markets are becoming more prevalent,” McGlone added, “but commodities and Bitcoin seem to be early reversal leaders.” “It’s a matter of bull-market longevity, and we believe the benchmark crypto will come out on top.”
On Wednesday, minutes from the Federal Reserve’s December policy meeting indicated that policymakers are prepared to aggressively reduce their stimulus assistance sooner than previously predicted. At least for the time being, the plan calls for three rate rises in 2022, as well as a decrease in the Fed’s balance sheet, which presently stands at about $8.3 trillion in Treasurys and mortgage-backed securities.
Markets may be overreacting in the near term, but it’s difficult to overstate how hawkish the Fed minutes were in the long run.
Reduced QE plus three increases was OK, but three hikes with expedited QT was not on anyone’s mind.
January 6, 2022 — Alex Krüger (@krugermacro)
Although reductions in government support are often seen as bad for risk assets, such as stocks and cryptocurrencies, McGlone feels Bitcoin is in a unique position to succeed in this environment:
“Among the dangerous and speculative, cryptos are at the top. If risk assets fall in value, it aids the Fed’s battle against inflation. Bitcoin, as a worldwide reserve asset, might be a big winner in that scenario.”
The “enduring three” — Bitcoin, Ether (ETH), and dollar-pegged stablecoins — are expected to retain supremacy in the larger cryptocurrency market, according to the Bloomberg analyst.
BTC/USD is in a definite downturn, which has increased since the FOMC minutes were released.
Following the publication of the Federal Open Market Committee meeting minutes on Wednesday, data from Cointelegraph Markets Pro and TradingView revealed a dramatic drop in the value of Bitcoin. For the first time since September, the flagship cryptocurrency has dropped below $43,000, and is already down 8% in the last 24 hours.
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