Bloomberg analyst predicts bullish rally for Bitcoin in next six months
Bloomberg's senior commodity strategist Mike McGlone believes that bitcoin prices will rebound in the second half of 2022.
Sharing his thoughts with his 48,100 Twitter followers on July 6, McGlone sees positive signs in data from the Bloomberg Galaxy Crypto Index (BGCI) and the 50- and 100-week moving averages of BTC prices. Indicators are now showing signs similar to the 2018 bear market bottom, which was followed by a strong rebound in the first half of 2019, he said.
"With the Bloomberg Galaxy Crypto Index nearing the bottom of 2018 with similar declines, and Bitcoin's discount to its 50-week and 100-week moving averages on a similar basis to the past, the risk-reward ratio will tilt in favor of responsive investors in the second half of the year .”
BCGI is designed to measure the performance of some of the largest crypto assets to determine the general performance of the market. A moving average is the average price of an asset over a specific period of time, such as 50 or 100 days.
The crypto winter of 2018 was a tough time for BTC, when the price plummeted from $16,000 in January to a market bottom of around $3,200 in mid-December, according to Coingecko. However, following this crash, BTC rose to around $13,000 by the end of June.
In a subsequent post, McGlone predicted that Bitcoin is either in the midst of “one of the largest bull markets in history, kicking off the second half of the year at a relative discount,” or data shows that the crypto market is starting to malfunction, scaring off investors.
“Our bias is that bitcoin adoption is more likely to continue to rise,” he said.
McGlone likened the first-half crash to "the dotcom bust of 2000-2002," when many companies went bankrupt but also paved the way for top players like Amazon and eBay.
However, one fact that weighs on the above analysis is that the bearish situation is largely a response to the Federal Reserve's hawkish monetary policy and attempts to tame inflation through a series of rate hikes.
In 2022, BTC and the entire crypto market are affected by several macro factors, such as the Russian invasion of Ukraine, global regulation, and unemployment. Meanwhile, the implosion of crypto projects and companies has turned sentiment even more bearish.
On July 5, McGlone noted that if stocks continue to fall at a "similar pace to the first half of the year," the Fed's latest 75-basis-point rate hike in June could be the last of the year as the government scrambles to stave off a recession. Such an outcome could lead to a rally across all asset classes as investors re-enter the market.