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Cryptocurrency prices keep chugging downhill.
This week the bitcoin price dipped 2.3%. The price of ethereum is down 6.2%. Meanwhile, the BNB price sank 7.1%, cardano 4.2%, XRP 5.1%, and solana 6.8%.
Many analysts are warning the crypto rout is far from over. As central banks are turning off money taps in tandem, investors scramble to sell off risk assets, including crypto. (You can learn why monetary tightening affect riskier asset the most here)
Bloomberg senior commodity strategist Mike McGlone, however, thinks bitcoin will dodge the risk-off selling pressure.
Bitcoin price
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In fact, he predicts the bitcoin price will stage a comeback and blow past $100,000 as soon as this year: “I think it [bitcoin’s price] is building a good base here around $40,000, and I think it’s going to take it at that level. It’s more likely to accelerate towards $100,000,” McGlone said in a recent interview with CoinTelegraph
McGlone’s bullish call rests on a “unique phase” bitcoin is undergoing. The analyst argues bitcoin is gradually shifting from a speculative asset to a store of value, which will differentiate its price action from the rest of the crypto market.
“Bitcoin is in a unique phase, I think, of transitioning from a risk-on to risk-off global digital store of value, replacing gold and becoming global collateral. So I think that’s going to be happening this year,” said McGlone.
Zooming out
Bitcoin dethroning gold as its digital successor has been one of the biggest narratives driving its price in the past two years. The analogy is not that far-fetched. As I wrote last year:
“From an investment and ideological standpoint, bitcoin is actually more like a commodity. More precisely, one of the most expensive and “useless” commodities in the world—gold.
Unlike other commodities like oil, gold has limited use. Gold is not a medium of exchange either. You can’t walk into Pizza Hut, drop a sliver of gold on the counter, and get a slice of pizza. At most, you’ll get some strange looks.
And yet, central banks hold 34,000 tons of the shiny, yellow bullion bars in their reserves. Institutional and individual investors have sunk ~$2.7 trillion into gold. And every year, gold holdings keep growing and growing. That’s because gold has just one job, and it does it very well. That is, sit tight in a vault and hold its value.”
In fact, I estimated back then that if just 20% of private gold investments (that’s excluding central bank reserves) moved to bitcoin, bitcoin’s market cap would double to $1.3 trillion:
“Let’s do some back-of-the-envelope math real quick. As I write this, there’s $650 billion worth of Bitcoin out there. Meanwhile, investors hold at least $2.7 trillion in gold, according to World Gold Council. If, say, they moved just a bit more than 20% of their gold holdings to Bitcoin, the cryptocurrency could double or more.”
Looking ahead
As 2022 is set to deliver the biggest hawkish monetary reversals in the past decade, bitcoin will finally answer the most important question: after 13 years, is it still a speculative asset? Or has it worn off on investors as a safe haven?
This question is going to be one of the most fundamental bitcoin drivers in the near term. If Mike McGlone is right, there’s a good chance bitcoin is bound for price ranges that are way past last July highs.
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