How Bitcoin Could Strengthen From A 10% Correction In The Stock Market

Reynaldo Marquez

3 years ago

3 mins read

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The party across global market might be coming to an end with Bitcoin positioned to be one of the assets with the potential to come on top. The shift in the U.S. Federal Reserve monetary policy will ripple across the stock market as interest rates spike and they reverse their asset purchase program.

At least, that’s how Mike McGlone, Senior Commodity Strategist for Bloomberg Intelligence views it. In a recent interview with Scott Melker’s “The Wolf Of All Streets” podcast, McGlone talked about Bitcoin as a risk-on asset, inflation, and the potential correction that will hit markets because of the change in FED policy.

The expert reminded investor of the old adagio “Don’t Fight the Fed” which in the current macro-environment could translate to “don’t long risk assets”. For Bitcoin, this shift could lead it to transform from a risk on to a risk off asset.

McGlone said the following on the financial institution’s coming policies to decrease inflation, sitting at its higher levels in 40 years, and what it could mean for Bitcoin in the long run:

(…) the lesson I learned about the FED, what I think is happening in this case, is that will job on until the market does their job for them or they have to keep raising rates until markets go backwards, which mean the stock market (…). I think the game is over (for stocks). They (the FED) will be restraining until markets tell them to stop, but I think Bitcoin will come up better off.

In that sense, the expert predicted a massive 10% to 20% correction in the stock market which would result in a 1:1 correlation event with risk assets. This event’s impact on BTC’s price could be short live, as it could for Ethereum (ETH), but the altcoins sectors might be heavily hit with some of the latest popular cryptocurrencies returning to their previous lows.

What Happened To The Bitcoin Bull-run?

On the alleged correlation between Bitcoin and the stock market, McGlone claimed there is insufficient data to support this theory. The benchmark crypto, the expert said, has only been part of the mainstream for a few years.

McGlone pointed out that Bitcoin (BTC) is one of the few assets with strong fundamentals, which are only getting stronger. The crypto asset’s supply is on a sustain decline, with a rising demand, and a reduction in volatility, “there is not too many asset that can say that”.

Crypto dollars – #Crypto assets exemplify global free-market capitalism, and a top winner has been the dollar. Mainstays #Bitcoin, #Ethereum and crypto dollars are poised to stay atop the ecosystem vs. about 16,000 rivals jockeying for speculative leadership pic.twitter.com/rmqfs62ByA

— Mike McGlone (@mikemcglone11) January 16, 2022

The first crypto by market cap has been stealing the shine from traditional hard assets, such as gold, while it increases its adoption levels, and it is included in some of the world’s largest companies’ balance sheets. Despite these facts, the price of Bitcoin seems to have made a full stop on its bullrun.

However, McGlone believes the follow trough will come with time. At the moment, BTC adoption could be “burdensome” for large investors, but the expert expects time to become a headwind for the cryptocurrency. He added:

I’m always skeptical of bull markets that are so extremely bullish, like the stock market right now (…). Then I look to this other asset (Bitcoin), it’s new, it’s just being adopted, demand is going up, supply is going down, which one do I want to be allocated to in the big picture?

As of press time, BTC’s price trades at $42,010 with sideways movement in 24-hours.

Bitcoin BTC BTCUSD — BTC moving sideways in the 4-hour chart. Source: BTCUSD Tradingview

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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