Bloomberg strategist compares Bitcoin’s declining volatility to Amazon stocks in 2009

Bloomberg strategist compares Bitcoin’s declining volatility to Amazon stocks in 2009

By Sam Grant - min read
  • The Fed’s position against risk-on assets is purging the most speculative assets, such as meme coins.
  • The senior commodity strategist at Bloomberg Intelligence, Mike McGlone, has forecasted the declining volatility against stock markets will allow Bitcoin and Ethereum to come out ahead

While crypto markets have suffered greatly since the start of May, bearish conditions can only last finitely and there are signs the downturn is coming to an end or at least abating. In a recent interview with Yahoo Finance, Mike McGlone, the senior commodity strategist at Bloomberg Intelligence, has expressed his belief that even as the nascent crypto markets suffer alongside the S&P 500, the former will come out on top.

Fed measures against inflation fuelled the recent crash

McGlone explained that the current performance of the stock and crypto markets has been caused by the Federal Reserve’s fight against inflation. The Bloomberg strategist anticipates that this trend will continue. He observed that crypto assets were some of the most risk-on assets and the most speculative of them, including meme coins such as Doge, are getting purged.

“The Fed is selling calls. They need risk assets to go down to reduce the ability for people to buy stuff or inflation won’t’ go down and some of the riskiest, most speculative assets, were crypto. So, what we’re doing is finally purging the things like the Dogecoins and the Shiba Inus.”

He added that the tokens to survive this purge are those which have proven infrastructure and products that people actually use, citing use cases such as Ethereum’s involvement in NFTs and tokenisation. In line with this, he projected that Bitcoin and Ethereum would come out stronger in the end.

Predicting increased user involvement with the two tokens, McGlone explained a situation where investors wouldn’t want to miss revolution. The revolution in question was also tied to the fact that the currently lucrative Amazon stocks had a similar volatility level in 2009 as Bitcoin presently does. Bitcoin’s 260-day volatility on May 13 stood at 70%, about the same proportion as Amazon stocks in 2009.

 “… remember if the stock market keeps going down… Bitcoin and Ethereum will go down but they’ll come out ahead and the key factor that I can point out is that the volatility of these nascent crypto assets, most notably Bitcoin, has continued to decline versus the stock market. That’s what happened with Amazon when it first came out,” the commodity strategist told Yahoo Finance.

Overall, McGlone believes Bitcoin will come out ahead after the Fed deals with inflation as the lead crypto token is becoming global digital collateral.