The $ 100,000 Bitcoin Price, Why It Beats Stocks in 22: Mike McGlone


  • Monetary policy moves could indicate an outperformance for crypto in 2022, according to Mike McGlone.
  • McGlone is a senior commodities strategist at Bloomberg Intelligence.
  • In a new report, he shares factors that could lead to the appreciation of three crypto assets in 2022.

Over the past 10 years, the average annual return for the US stock market has been around 14%, according to officialdata.org. That’s about 12 percentage points above the average annual return for the previous decade, which was around 1.65%.

The decade-long bull run has been extraordinary, but consensus is growing that these returns will not last.

Just this week, David Solomon, CEO of Goldman Sachs, said investors should expect lower returns over the next two years.

“I don’t believe double-digit compounded perpetuity stock returns are something as an investor that you should expect,” Solomon said on CNBC’s “Squawk Box”.

This joins legendary investors Meb Faber of Cambria Investment Management and Ben Inker of GMO, who both shared similar perspectives with Insider.

But while the consensus also indicates that government bond yields remain low, where are investors putting their money?

Among the outlook for investment banks and asset managers, many point out that 2022 will be the year of the stock picker and that investors can be successful in a more difficult stock market with an active investing approach. Other solutions include using alternatives to find additional returns from hedge funds and private equity strategies.

But Mike McGlone, senior commodities strategist at Bloomberg Intelligence, believes crypto may be the alternative asset class to win against stocks and bonds next year.

“A new impetus for the


Federal Reserve

to remove the bowl of punch, and lower bond yields may indicate a macroeconomic environment in 2022 that favors the major cryptocurrencies bitcoin and ethereum, ”McGlone said in a recent memo. “Crypto assets showing divergent strength versus equities towards the end of 2021 may portend digital assets continuing to outperform in 2022.”

2022 could be a bullish year for both crypto indicators – bitcoin and ether – as well as stablecoins, which McGlone rebranded as “crypto dollars” in his last December post.

“We expect the United States to embrace cryptocurrencies in 2022, with appropriate regulation and associated bullish price implications,” McGlone said.

But what is it that gives McGlone such confidence in crypto going forward, especially after bitcoin’s value fell nearly 30% last weekend?

McGlone attributes this to wider adoption of the crypto over the past year and its ability to weather “most swings,” such as the nearly 50% correction earlier this year when China banned the crypto mining.

Now, as the Federal Reserve begins to tighten monetary policy, McGlone expects this to lead to both a normalization of stock returns and a continued decline in US Treasury yields. This combination “may shine on” bitcoin and ethereum, he said.

Even if a reversal of the tightening were to occur after a significant drop in the stock market, bitcoin could still win, he said.

Bitcoin will face initial headwinds if the stock market goes down, but as falling stock prices put pressure on bond yields and push the central bank more


liquidity

, crypto may become the primary beneficiary, ”McGlone said.

If Treasuries find it difficult to hold above 2%, then there could again be a transition to a more deflationary environment in 2022 that would favor bitcoin, he added.

He also doesn’t expect crypto adoption by the fund management industry to stop in 2022, which is a major driver of his bull case.

“Past performance is no indicator of future results, but when a new asset class outshines the incumbents, the naysayers have no choice but to join us,” McGlone said. “We see this process playing a pivotal role in 2022, as fund managers may face greater risk if they continue to have no portfolio allocations to cryptos.”

That’s a perspective shared by mainstream finance veteran Matteo Perruccio, who now works as the international chairman of billion-dollar crypto asset manager Wave Financial. Perruccio is also part of the camp who believes equity returns will normalize and bond returns will continue to disappoint.

This market environment, combined with increased institutional adoption of crypto, is expected to create a significant surge in 2022, with bitcoin heading towards $ 125,000 by the end of next year, Perruccio said.

Crypto also has a strength advantage over the stock market.

“Compared to broad stocks, which have not suffered a 10% correction since the 2020 swoon, the crypto market may have a relative advantage in 2022,” McGlone said.

So if things look so rosy for 2022, who will be the winners? McGlone advises looking to both benchmark cryptocurrencies and crypto dollars.

“Loyal crypto dollars, along with bitcoin and ethereum, are poised to stay at the top of the ecosystem against around 15,000 rivals who are vying for speculative leadership,” McGlone said. “Binance Coin, solana and cardano have replaced XRP, bitcoin cash and the chain link near the top of a year ago.”

As for 2022, he thinks bitcoin is in full consolidation


bull market

, with key support around $ 50,000 and resistance of $ 100,000 in 2022.

Ether appears to be in a “more sustainable bull market,” he added, based on its outperformance after the launch of the first exchange-traded fund that tracks bitcoin futures in the United States.

The path to $ 100,000 for bitcoin in 2022 may not be that straightforward.

Perruccio noted that this remains a volatile asset class and that he tells his friends and family that they shouldn’t risk what they can’t afford to lose in crypto. He is convinced that bitcoin will not reach zero because it is too big and too tried and true, but he could see it drop to close to $ 35,000 in some scenarios.

Meanwhile, crypto trader Scott Melker told Insider he believes the bull’s case for crypto could be renewed if he breaks key support at $ 53,000. But if bitcoin drops below $ 42,000 and stays there for a while, it could mean an even bigger drop to $ 28,000.


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