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Mike McGlone is chief commodities strategist at Bloomberg Intelligence. in one the conversation With Kitco news’ Michelle Makori, McGlone discussed Fed rate hikes, Ethereum and Merge, ‘crypto winter’. It is certain that crypto will perform well in the long run and that the Fed has learned from the past and will not ease up any time soon.
Since the beginning of 2022, inflation rates have increased a lot in several countries; oil markets have been significantly affected since the start of the Russia-Ukraine war. The Fed has been under constant surveillance amid the rapidly developing geopolitical scenario in different parts of the world. Its rate hikes could have a major impact on the global economy. Ethereum’s Merge brought it back to the light. However, regulatory roadblocks continue to paint a bleak picture of the future of crypto.
Calling the Fed’s rate hike action a “table” McGlone believes he cannot ease rates because “times have changed” and the economy cannot depend on the Fed to provide increased liquidity.
According to him, cryptos are underperforming due to the Fed’s inflationary measures:
“What’s pressuring crypto this year? I think that’s the Fed’s hammer…I’m concerned about short-term pain for long-term gains”
“I see a similar case: This is 1929 and the Fed is tightening… The Fed is not going to relax anytime soon. One way to stop the Fed from easing is for the markets to go down, unfortunately. Otherwise, they will stay and wait until inflation drops.”
McGlone believes that this is just the early days of a bearish market and that unless the Fed stops “tightening up” and letting the markets fall a bit, things will only get worse. He argued that it is a “global macroeconomic winter” and not a crypto winter.
Cryptos and other economies
McGlone is optimistic about Merge, but thinks the development is overrated.
In response to Makori’s question about how “institutional interest” will play out in the context of the macro environment he explained that Ethereum’s new progress would generate “cash flow” which makes it a great investment.
“Cryptos are the fastest horse in the race and have a rapidly advancing technology advantage. And looking to the future, they will continue to appreciate”
“The big picture about Ethereum is that it’s disrupting finance like Futures and ETFs”
Asked about the possibility of inviting enhanced SEC scrutiny after the merger, McGlone said the SEC needs to clarify.
McGlone confirmed that the Fed will not ease rates because a similar situation occurred before the 2008 financial crisis. He argued that development occurs through technological progress and that the US has developed as a result of technological progress.
Admitting he was wrong, he said long-term US Treasury yields are moving into assets to “weather the storm”
McGlone stated that according to his colleague, ETH could touch $6000. He thinks Ethereum is a “different animal”.
“It has a little more competition compared to Bitcoin, but it’s dominant.”