• Fed’s tapering and rising inflation will help fuel the BTC price rally in 2022, says Bloomberg analyst Mike McGlone.
• However, McGlone isn’t quite optimistic about the surge in ETH price and calls it “overextended”.

Despite the broader cryptocurrency market trading under major pressure in the last month of the year, some market analysts have been predicting a bull case scenario for the next year of 2022. In the latest research note, Bloomberg Intelligence senior commodity strategist Mike McGlone wrote that the U.S. will “embrace cryptocurrencies in 2022”.

He further noted that Bitcoin (BTC) holds the possibility of hitting $100,000 levels in the upcoming year. Mike McGlone mentions:

We expect the U.S. to embrace cryptocurrencies in 2022, with proper regulation and related bullish price implications. The unlimited supply of fiat currency should sustain rising prices, notably in bitcoin and ethereum, which have limited supply.

The Bitcoin price has corrected more than 30 percent from its all-time high over the last few weeks. This comes as part of the broader market correction with Bitcoin currently struggling under $50,000 levels. Despite this, the world’s largest cryptocurrency trades at 2x or 100 percent premium year-to-date.

The fed-driven stimulus has helped the crypto market

The stimulus-driven environment over the last year will help the overall crypto market to rise in 2022. Similar has been the scenario across the global markets and assets across the board. However, the Fed will start its tapering process to curtail the stimulus in 2022. On the other hand, inflation fears have been soaring recently.

McGlone, however, thinks this to be positive for Bitcoin and the broader crypto market. Speaking on this, the Bloomberg strategist writes:

Renewed impetus from the Federal Reserve to take away the punch bowl, and declining bond yields may point to a macroeconomic environment in 2022 that favors top cryptocurrencies bitcoin and ethereum. Crypto assets showing divergent strength versus equities near the end of 2021 may portend continued digital-asset outperformance in 2022.

Furthermore, the U.S. stock market has stayed volatile this month of December. This has been due to the combined factors of stimulus pullback by the Fed and the fears surrounding the spread of the Omicron Covid variant. McGlone notes:

A primary force to reverse expectations for Federal Reserve tightening in 2022 is a drop in the stock market, which may be a bit of a win-win for bitcoin. Bitcoin appears to be on a trajectory for $100,000,” and is “well on its way to becoming a digital store-of-value,” similar to gold. “We see it as more of a question of time, notably due to the eonomic basics of increasing demand versus decreasing supply.

Bloomberg strategist not much bullish about Ethereum

In a contrasting opinion to what the market analyst believes, McGlone is not much optimistic about Ethereum and thinks it to be “overextended”. However, he thinks that Ethereum will continue to stay in the range between $4,000-$5,000. Referring to Ethereum’s long-awaiting transition to Ethereum 2.0, McGlone said:

Ethereum enters 2022 with rising adoption and declining supply, while having withstood a substantial correction this year. The key question is how overextended prices may need to get for a pullback, and how deep into support the number two crypto may dip until it finds responsive buyers,” adding “$4,000 may act as the key pivot for 2022.

It will be interesting to see how the crypto market moves ahead going into 2022.