Bitcoin could outperform stocks in 2022 amid Fed tightening — Bloomberg analyst

The
Federal
Reserve’s
signaling
for
tighter
monetary
policy
in
2022
could
provide
short-term
headwinds
for
risk
assets
such
as
stocks
and
cryptocurrency,
but
there’s
a
good
chance
that
Bitcoin
(BTC)
still
comes
out
on
top
as
investors
recognize
its
value
as
a
digital
reserve
asset,
according
to
Bloomberg
commodity
strategist
Mike
McGlone. 

The
January
edition
of
Bloomberg’s
Crypto
Outlook
described
the
Federal
Reserve’s
plan
to
raise
interest
rates
in
2022
as
a
possible
“win-win
scenario
for
Bitcoin
[versus]
the
stock
market.”
The
reasons
stem
from
the
fact
that
the
S&P
500
Index
is
currently
the
most
overextended
above
its
60-month
moving
average
in
over
two
decades
and
that
Bitcoin
is
seeing
growing
mainstream
appeal
as
an
inflation
hedge.

“Stretched
markets
have
become
common,
but
commodities
and
Bitcoin
appear
to
be
early
reversion
leaders,”
McGlone
said.
“It’s
a
question
of
bull-market
duration,
and
we
see
the
benchmark
crypto
coming
out
ahead.”

Minutes
from
the

Federal
Reserve’s
December
policy
meeting

revealed
on
Wednesday
that
central
bankers
are
ready
to
aggressively
curb
their
stimulus
support
more
quickly
than
previously
expected.
The
plan,
at
least
for
now,
includes
three
interest
rate
hikes
in
2022
accompanied
by
a
reduction
in
the
Fed’s
balance
sheet,
which
currently
stands
at
nearly
$8.3
trillion
in
Treasurys
and
mortgage-backed
securities.

Although
stimulus
reduction
is
usually
considered
negative
for
risk
assets,
a
broad
category
that
includes
equities
and
cryptocurrencies,
McGlone
believes
Bitcoin
is
in
a
unique
position
to
outperform
in
this
environment:

“Cryptos
are
tops
among
the
risky
and
speculative.
If
risk
assets
decline,
it
helps
the
Fed’s
inflation
fight.
Becoming
a
global
reserve
asset,
Bitcoin
may
be
a
primary
beneficiary
in
that
scenario.”

Within
the
broader
cryptocurrency
market,
the
Bloomberg
analyst
said
he
expects
the
“enduring
trio”

namely
Bitcoin,
Ether
(ETH)
and
dollar-pegged
stablecoins

to
maintain
dominance
throughout
the
year. 


BTC/USD
is
in
a
clear
downtrend
that
has
accelerated
following
the
release
of
the
FOMC
minutes. 

Data
from

Cointelegraph
Markets
Pro

and

TradingView

showed
a
sharp
decline
in
the
value
of
Bitcoin
on
Wednesday
following
the
release
of
the
Federal
Open
Market
Committee
meeting
minutes.
The
flagship
cryptocurrency
plunged
below
$43,000
for
the
first
time
since
September
and
is
currently
down
8%
over
the
past
24
hours.

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