After the Bank of Japan (BOJ) announced a surprise turnaround in its monetary policy today, Bitcoin price managed to rally near the key USD 16,900 resistance level. The BOJ announced that it will dramatically broaden its yield curve control bandwidth to 0.50%. At the same time, it announced that it will significantly increase the number of government bonds it will buy each month.
According to Bloomberg senior commodity analyst Mike McGlone, this trend could continue. McGlone shared his insights via Twitter and said a “warm period” for Bitcoin is ahead.
As the analyst notes, BTC has taken a beating as a risk asset with most other cryptocurrencies in 2022, but “seems poised to resume its tendency to outperform”. This will happen when the US Federal Reserve eases monetary policy and completes its pivot.
Bitcoin is set to perform better when…
According to the chart of a Bloomberg Intelligence report, the levels that BTC and the Nasdaq 100 stock index resisted have now turned into support.
According to the analysis, BTC price rose in 2020 and 2021 due to unprecedented fiscal and monetary stimulus, which allowed it to outperform the stock index. McGlone further elaborated:
With a Bitcoin/Nasdaq ratio of 1.5x on Dec. 16, falling relative risk versus the stock index has been consistent for most of the benchmark crypto’s history. At 2x, Bitcoin’s annual volatility at the end of 2022 is comparable to 4x at the end of 2021.
In the coming year 2023, McGlone expects it will be a matter of how much lower the global economies fall. Investors should therefore not underestimate BTC, as the risk/reward ratio favors the leading cryptocurrency.
“Risk vs. reward seems to argue against under-allotment or underestimation of Bitcoin’s propensity to continue its path to digital collateral,” McGlone asserted.
In other words, the Bloomberg analyst predicts that once the US Federal Reserve restarts its cash printer, lowers interest rates and returns to monetary easing, Bitcoin will once again “outperform” the rest of the market.
In another tweet, McGlone predicted that the leading cryptocurrency will outperform Tesla stock. “The almost certain decrease in Bitcoin supply compared to the rising number Tesla stock outstanding favors cryptocurrency outperformance when the rules of the economy apply,” McGlone said.
BTC price at crucial level
Meanwhile, BTC price should break the all-important USD 16,900 level in the near term and then could have a strong continuation. If so, investors should keep an eye out for the next vital resistance in the $17,350 area.
Featured image of Kanchanara on Unsplash, chart from TradingView.com