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Bitcoin price still on track to hit $100k by 2025 - Bloomberg's Mike McGlone
(Kitco News) - Once this bear market in risk assets subsides and valuations recover again, Bitcoin will outperform other asset classes, said Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence.
Speaking to Michelle Makori, Editor-in-Chief and Lead Anchor of Kitco News, McGlone said that markets are about to witness a "great reversion" in which prices mean revert to the upside.
"I think what's going to happen is the great reversion is just getting started. It might be like the aftermath of 1929. I think it's going to be like the aftermath of 2008, maybe like after 1987. It's so overdue, and all risk assets everywhere, from condos in Miami and Toronto to the stock market…it's just starting to happen, and the greatest inflation in 40 years, and in most people's lifetime is just starting that," he said.
Bitcoin Price
Once risk assets begin to recover, Bitcoin will be "one of the best assets on the planet", McGlone said.
"That's my base case. My outlook is I think some of the best assets will be gold, U.S. long bonds, and Bitcoin," he said.
McGlone maintains that the largest cryptocurrency is still on track to hit $100,000 by 2025, but the price may still trade lower from here, especially since Bitcoin and the NASDAQ is still tightly correlated. "Right now I fully expect Bitcoin to trade lower. I don't' know how much lower… But what I fully expect is that when we see the foundation form, which is going to happen, Bitcoin and Ethereum should come out ahead because they've outperformed for so long" he said.
McGlone remarked that "30,000 [USD] is a very good support pivot in Bitcoin… it could get to 20,000, I doubt it does, but I fully expect within the next two years, it's going to go back to and gets to 100,000 dollars. It's just a question of time. That's purely measuring, supply by code is going down, demand and adoption are going up."
When asked why Bitcoin has not behaved like a safe-haven asset and as a hedge against inflation, McGlone said, "It's a transition period. It has to be one of the most significant risk-on assets in the history of mankind. It's got to purge some of that risk-on. What I see is a transition to a risk-off asset."
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Deflation or Inflation?
McGlone said that deflation, not more inflation, will follow this great reversion of asset prices.
"I think we're going back to deflation and the best way to get deflation is get a spike up in prices and then flush them, and that's what we're doing. We're in the early days of flushing. You just look at the stock market. The fact that it's facing more and more [Fed] tightening and it's already down 30% is something most people who have invested in the last 40 years have not seen. This is the new world," he said.
One indicator for coming deflation can be found in the crude oil markets, McGlone noted.
"Crude oil is playing out just like it did in 2008. It peaked in July 3rd and then by the end of the year it was down at $40. That sparked massive deflation. I see parallels this year," he said.
Long-term, technological advancements will accentuate further deflationary pressures.
"The key fact is rapidly advancing technology is massively deflationary. We're just getting a blip in that trend. The key fact that most people need to realize is the U.S. money supply, just about a year ago, jumped up to the highest ever on an annualized basis. That was 26%," he said. "Now, it's reverting. That's the number one factor of all inflation: money supply is going back, everything's coming back, it's going back to normal."
Gold and Silver
McGlone is "bullish" when it comes to gold. "I think what gold needs is one key inflection point… What's going to happen in gold is once we see a little peak in long bond yields, a little end of all these hiking expectations from the Fed, which is going to come from a lower stock market, gold takes off."
He added that silver will perform badly in the short-term, as the economy experiences deflation and slowing GDP growth. "I look at silver more of an industrial metal now," said McGlone. "It's really stuck with copper. Copper is down on the year and that, to me, is my key indicator. Dr. Copper dropping, with crude oil rallying, is an indication of copper and silver being poor-performing this year, showing us that we have a major economic problem. These are the metals that should perform the best in the next 5, 10, 20 years, but in the short-term the fact that they're getting hammered versus crude oil shows the bigger picture of recession globally."
In the long-term, McGlone said that he is optimistic about silver and copper since they are part of the "major demand for decarbonization."
For more information on where McGlone sees gold, crude oil and stablecoins headed watch the video above.
Follow Michelle Makori on Twitter: @MichelleMakori
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