According to Bloomberg analyst Mike McGlone, the U.S. Federal Reserve’s inflationary “sledgehammer” will push the price of Bitcoin (BTC) and Ether (ETH) even lower, before reaching all-time highs again in 2025. Ahead of the latest Fed rate hike to be announced this week, the market is expecting a minimum increase of 75 basis points, however some are concerned that it could be as high as 100 basis points, which would cause the rate hike to reach its largest level in 40 years. Speaking to financial news outlet Kitco News on Saturday, McGlone, senior commodity strategist at Bloomberg Intelligence, suggested that the market devastation continues to affect BTC, ETH and the broader cryptocurrency sector as the Fed’s actions will continue to dampen positive investor sentiment:
“We have to review the macro picture and what is putting pressure on cryptocurrencies this year. And that’s the Fed’s move.”
The price of BTC has fallen 13.4 percent over the past seven days and is sitting at $19,350 at press time, while ETH has dropped 20.7 percent to around $1,350. In particular, the 20% drop in ETH is a cause of discussion, as the price of this asset has increased since The Ethereum Merge took place on September 15. With the network upgrade resulting in “buying rumors, selling news,” McGlone suggested that ETH could drop to “$1,000, or even a little lower.” This depends on the Fed’s move for the remaining 4 months of the year. “I’m afraid [The Merge] is overblown, the drop in eth’s price and causes a Bear market on the macroeconomy for all risky assets,” McGlone said. In the interview, McGlone even predicted that the latest rate hike could cause problems on assets worse than the 2008 housing bubble crash:
“I think it’s going to be worse than the 2008 correction, worse than the Great Financial Crisis.”
“The Fed started easing in 2007, and then they added a lot of liquidity. Right now, they can’t do that anymore,” he added.
Of course, there is a bit of hope, McGlone thinks btc will recover strongly and reach a new all-time high of $100,000 by 2025, while he is optimistic about ETH in the long run due to the potential of institutional investors. Analysts and pundits share a pessimistic attitude toward McGlone. Speaking to the New York Times on Monday, Kristina Hooper, chief global market strategist at Invesco, noted that the Fed’s latest announcement will have important implications for the direction of the stock market for the rest of the year. “The Fed has been the main driver of the stock market this year, and it’s mostly very bad,” she said. While Ark Invest CEO Cathie Wood said in a tweet Sunday that “the Fed is solving supply chain issues by disrupting demand and, in my view, releasing deflation, setting it up for a spindle. – https://twitter.com/CathieDWood/status/1571246847116582912?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1571246851210313737%7Ctwgr%5E462bc92283a916b8cfff2db7dcc53629fedbb8a6%7Ctwcon%5Es2_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Ffed-sledgehammer-will-further-batter-btc-eth-prices-says-bloomberg-analyst See also: The market is not going to skyrocket anytime soon – It is necessary to adapt to this dark period.