Bitcoin an inflation hedge? Actually, deflation could see it hit US$100k in 2022: Bloomberg analyst
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As inflation levels in the US soar to their highest in 40 years, Bitcoin is likely to hit US$100k next year amid “deflationary forces” in global markets, according to Mike McGlone.
Bloomberg’s Senior Commodity Strategist released his 2022 crypto outlook report late last week and it made for some pretty positive reading for Bitcoin and Ethereum. Gold, too…
Like gold, Bitcoin is considered by many, including prominent US investors Paul Tudor Jones and Anthony Scaramucci, to be a hedge against rising inflation. However, having pulled back about 30-40 per cent from its all-time high of US$69k, this narrative for Bitcoin hasn’t been particularly strong just of late. (Although nor has it been for gold, to be fair.)
$100,000 #Bitcoin, $50 #Oil, $2,000 #Gold? 2022 Outlook in 5 Charts – Peaking commodities and the declining yield on the Treasury long bond point to risks of reviving deflationary forces in 2022, with positive ramifications on Bitcoin and gold. pic.twitter.com/j3VNAOCwuz
— Mike McGlone (@mikemcglone11) December 9, 2021
Somewhat flipping the inflation-hedge script then, McGlone states in his report that it’s actually deflation, led by impetus from the US Federal Reserve, that could swap inflation next year and create an environment for Bitcoin’s price to thrive.
“Renewed impetus from the Federal Reserve to take away the punch bowl, and declining bond yields may point to a macroeconomic environment in 2022 that favors top cryptocurrencies Bitcoin and Ethereum,” reads the report.
And despite ongoing regulatory uncertainty in the US, McGlone said that Bloomberg expects America to actually “embrace cryptocurrencies in 2022, with proper regulation and bullish price implications”.
The analyst noted that “Bitcoin appears to be on a trajectory for $100,000” and that we are likely to see a “paused, corrected and refreshed bull market”.
And, on the US$100k figure, he emphasied that Bloomberg sees it as “more of a question of time, notably due to the economic basics of increasing demand vs. decreasing supply.”
The Bloomberg take is an interesting one, and worth considering given the recent stated intention from the US Federal Reserve to soon begin tapering, or winding back, its US$120bn-per-month bond-buying spree.
Meanwhile, there are plenty of others around who believe inflation will continue on its merry way to scary and uncontrollable levels through next year, especially if other macro forces, such as COVID’s effect on economies continue to remain a strong factor.
For instance, although he despises Bitcoin, US gold bug Peter Schiff frequently finds himself uncomfortably on the same inflation-hedge page with many a Bitcoin maximalist.
“How long before investors realize that even if the Fed follows through with its inflation-fighting plan to taper QE and raise interest rates slightly in 2022, that it’ll be too little too late to derail this inflation juggernaut?” Shiff recently queried on Twitter. “If Powell doesn’t get medieval, inflation will!”
How long before investors realize that even if the #Fed follows through with its #inflation fighting plan to taper QE and raise interest rates slightly in 2022, that it'll be too little too late to derail this inflation juggernaut? If #Powell doesn't get medieval, inflation will!
— Peter Schiff (@PeterSchiff) December 7, 2021