- The Federal Reserve’s efforts to combat inflation could cause speculative assets such as meme coins to be eliminated.
- Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, predicts that stock markets will experience a decrease in volatility while Bitcoin and Ethereum could outperform.
This May, the crypto markets have been hard-hit, however, analysts believe that the bearish market won’t last for too long. In an interview with Yahoo Finance, Mike McGlone, a senior commodity analyst at Bloomberg Intelligence, stated that while both stocks and cryptos have experienced a rough patch, the former will eventually outperform.
The Federal Reserve’s Measures to Combat Inflation Could be to Blame
McGlone pointed out that the current volatility in both the stock and the crypto markets is due to the Federal Reserve’s measures to reduce inflation. He further stated that this trend is predicted to continue, with risky and speculative assets such as meme coins being purged.
“The Fed is selling calls. Risky assets must fall to lower people’s ability to buy goods. Otherwise, inflation will not go down. Cryptocurrencies were some of the most risky and speculative assets. So what we are doing is finally purging such things as Dogecoin and Shiba Inu.”
He went on to explain that tokens that will survive the purge are those with proven infrastructure and products people actually use, such as Ethereum’s participation in NFTs and tokenization. In line with this, McGlone projected that Bitcoin and Ethereum will be the ones to experience a recovery sooner.
McGlone noted that the tokens have increased user engagement and that investors wouldn’t want to miss out on this revolution. He compared the current volatility of Bitcoin to the Amazon stock in 2009, which is now profitable. On May 13, Bitcoin’s 260-day volatility remained at about 70%, similar to the Amazon stock in 2009.
“Remember if the stock market keeps going down, Bitcoin and Ethereum will fall, but they will rebound. The key factor I can point out is the volatility of these emerging crypto assets, particularly Bitcoin, has continued its decline against the stock markets. That’s what happened to Amazon when it was released for the first time in 1991. The commodities strategist told Yahoo Finance.
Overall, McGlone believes that Bitcoin will come out on top, as the primary crypto token has now become a global digital collateral.
