A Bloomberg analyst believes Bitcoin has moved into a non-stop maturation phase. What does that mean?
Bloomberg Intelligence senior analyst Mike McGlone stated that Bitcoin has entered a stage of “unstoppable maturation”. In addition, the major cryptocurrency should now be seen as a leading market indicator, which could indicate a U.S. Federal Reserve policy reversal in a permanent rise in the lending rate. We tell you more about this point.
Note that Mike McGlone comments on the cryptocurrency market quite often. In particular, earlier this month he suggested that digital assets will be seen as a profitable investment until the end of 2022.
Yet the day before, the same BTC had performed quite steadily against the backdrop of a decline in other assets, suggesting that its investors’ appetite is growing. Therefore, a reversal in markets could boost this sentiment and make the cryptocurrency move more prominently.
Cryptocurrency investors
What are the benefits of Bitcoin
Here’s a quote from McGlone from his recent LinkedIn post.
The fact that Bitcoin didn’t yet exist in October 2007, when WTI oil first rose to its current $84 a barrel, may be a testament to the advantage of the nascent technology. In a world rapidly transitioning to digital technology, cryptocurrency is gaining value as a unique alternative asset and global collateral for which no one is responsible.
That is, the expert notes the growing popularity of digital assets along with their advantages in the type of independence from any governments. McGlone also reminds that Bitcoin is still a new asset class that, one way or another, will continue to grow in popularity.
The rise of BTC supply
Bitcoin is often referred to as “digital gold” – this has been stated many times in the past by famous billionaires like Bill Miller and Michael Saylor. Not only does the cryptocurrency have a limited maximum supply, but it also has complete independence from the financial health of any company or government. In addition, approximately every four years BTC goes through a halving process, which cuts the coin’s issuance in half, which essentially means that there are fewer new bitcoins in circulation.
According to CryptoPotato’s sources, McGlone acknowledges that the US Federal Reserve’s tight credit policy has affected all markets – including crypto. Still, the same Bitcoin has collapsed 70 percent since setting its all-time high on Nov. 10, 2021.
The pace of the US Federal Reserve’s credit rate hike
Nevertheless, the analyst argues that Bitcoin’s current risk-to-potential profitability ratio looks favourable. This is supported by the growing demand and popularity of the crypto, as well as fixed inflation and the low price of BTC. The expert continues.
Bitcoin’s return to its propensity to outperform most assets in terms of profitability may be a matter of time, as its adoption into mass trading and adaptive changes to US accounting standards help boost it.
Bitcoin also maintained low volatility in one price channel throughout the third quarter of 2022. At the same time, many traditional assets continued to fall within the same time frame – meaning that, in theory, buying cryptocurrencies may now be more profitable than most other assets. In addition, this Bitcoin property could be seen as the first signal of an imminent reversal in US Federal Reserve policy.
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McGlone also shared his thoughts on the ever-increasing hash rate of the Bitcoin network. He pointed to a graph noting that BTC’s 10-day average hash rate in October “roughly corresponds” to its true price of around $70,000. However, the major cryptocurrency is now trading around $19,000.
Bitcoin’s hashrate and price
Such a big difference between price and hashrate was last seen during the BTC crash in Q1 2020 – just after the COVID-19 pandemic was announced. However, a sharp collapse on Bitcoin’s chart was followed by a rise, and then the cryptocurrency rose all the way to the end of 2021 and new all-time highs. According to McGlone, the market is in a similar situation at the moment, Cointelegraph reported.
It should be noted that hints that the first cryptocurrency's exchange rate and its network's hash rate are related sounds rather strange. Still, BTC miners are forced to sell coins to pay for fixed costs like electricity and room rent. And because the difficulty of mining BTC is at an all-time high right now, that means the profitability of bitcoin mining equipment is at a low point. So, there will be more reasons to sell crypto to hardware owners, so to talk about any unfair BTC price solely because of hash rate situation is just wishful thinking.
An old cryptocurrency investor
We believe that Bitcoin's potential along with its key benefits were clear even earlier, but in the current climate of challenges in the global economy they have become more apparent. Therefore, the development of the digital asset industry has been ongoing since the niche was created. However, more and more people will now seek to learn about it in practice.
Most likely, we will not see significant growth in BTC until the end of this year – before that we need to see a significant change in the US Federal Reserve’s policy. Follow the market and other news in our millionaires’ crypto-chat.
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