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- Bitcoin and Ethereum will survive the oncoming economic downturn
- Crypto winter? No sir! It is a Macro Global winter
- The advantage that cryptos have over any other asset – tech advancement
Mike McGlone is Senior Commodity Strategist at Bloomberg Intelligence. In an interview with Michelle Makori of Kitco news, McGlone discussed Fed’s rate hikes, Ethereum and the Merge, the ‘crypto winter’. He is confident that cryptos will perform well in the long term and that the Fed has learnt from the past and will not be easing any time soon.
Since the beginning of 2022, inflation rates have risen sharply in several countries; oil markets have been significantly affected after the Russia-Ukraine war began. The Fed has been under constant watch amid the rapidly developing geopolitical scenario in different parts of the world. Its rate hikes can have significant impacts on the global economy. Ethereum’s Merge brought it into the limelight, again. However, regulatory roadblocks continue to paint a bleak picture of the future of crypto.
‘The Macroeconomic Winter’
Calling the Fed’s rate hike action ‘sledgehammer’ McGlone believes it cannot ease rates because ‘times have changed’ and the economy cannot depend on the Fed to increase liquidity.
According to him, cryptos are underperforming due to Fed’s inflationary measures:
“What is pressuring the cryptos this year? I think that is the Fed’s sledgehammer… I’m worried about short term pain for long term gain”
“I see a similar case: this is 1929 and the Fed’s tightening… the Fed’s not gonna be easing anytime soon. The number one way to stop the Fed from easing is markets go down unfortunately. Otherwise they’re just going to hang out and wait until inflation goes down”
McGlone believes right now is just the early days of a bearish market and unless the Fed stops ‘tightening’, and allows the markets to fall for a while things will get worse. He argued that it is a ‘Macroeconomic Global winter’ and not a crypto winter.
Cryptos and the rest of the economy
McGlone is optimistic regarding the Merge but he feels the development is hyped.
Answering Makori’s question on how the ‘institutional interest’ will play out in the context of the macro environment He explained that the new advancement in Ethereum would generate ‘cash flow’ which makes it a great investment.
“Cryptos are the fastest horse in the race and they have the rapidly advancing technology advantage. And looking forward to the future, they will continue to appreciate”
“The big picture about Ethereum is it is revolutionizing finance like Futures and ETFs”
To an enquiry about the possibility of inviting enhanced scrutiny from the SEC post-Merge, McGlone responded that the SEC needs to clarify
McGlone asserted that the Fed will not ease rates because a similar situation occurred before the 2008 financial crisis. He argued that the development happens through technological advancement and the US developed because of tech advancements.
Admitting that he was wrong, he said US long bond treasury yields are go to assets to ‘weather out the storm’
McGlone stated that according to his colleague, ETH may touch $6000. He believes Ethereum is a ‘different animal…’
‘it has a little more competition when compared with Bitcoin but is dominant.’
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
