Mike McGlone – Senior Commodity Strategist for Bloomberg Intelligence – recently suggested that Bitcoin could be entering its “unstoppable maturation” stage as a nascent technology.
The strategist also characterized Bitcoin as a possible leading market indicator, which could currently be signaling an end to Federal Reserve rate hikes.
Bitcoin as Global Collateral
As McGlone explained in a post over LinkedIn, crude oil has risen back to $84 per barrel, which “may indicate the appreciation advantage of the nascent technology.” The last time crude oil was at this price was in October 2007, when Bitcoin didn’t exist.
“In a world rapidly going digital, the benchmark crypto is gaining value as a unique alternative asset and global collateral that’s no one’s liability or responsibility,” he said.
Prominent Bitcoin bulls like Michael Saylor and Bill Miller often tout Bitcoin as a form of “digital gold” for this reason. Not only does it have an absolutely scarce supply, but is also free of any liability relationship with a particular company or nation-state.
However, up until the last few months, Bitcoin has performed more like a high-volatility tech stock than a safe haven asset. It is currently down 70% from its high last November.
According to McGlone, it “makes sense” that Bitcoin would contract in a historically hawkish macro-environment, especially after being one of the “best-performing assets of the past decade.” Nevertheless, he claimed the current risk/reward on Bitcoin looks favorable, given its rising demand/adoption, declining supply, and relative price discount.
“Returning to its propensity to outperform most assets may be a matter of time, as mainstream adoption progresses and adaptive changes in US accounting standards give it a lift,” he said.
Last week, the Financial Accounting Services Board (FASB) agreed to adopt a fair value accounting standard for digital assets. Many investors believe this will make Bitcoin more attractive for institutions to hold on their balance sheets.
Is Bitcoin a Leading Indicator?
In a report shared by the strategist, Bloomberg Intelligence said Bitcoin is “ascending” as a leading indicator for an end to the Fed’s inflation fight. While other risk assets crumbled on rising interest rates throughout Q3, Bitcoin remained mostly flat.
“A top potential catalyst for central banks to curtail tightening is for markets, notably stocks and commodities, to do it for them, which may favor Bitcoin,” it said.
The United Nations called on the Federal Reserve earlier this month to put an end to rate hikes, for fear of causing a global sovereign debt crisis.