Bitcoin may become a “risk-off asset” amid market correlation

Bitcoin could transition from a "risk-on" to a "risk-off" asset in 2022

Single bitcoin on top of a pile of other coins                                 
A rise in interest rates by the US Federal Reserve could potentially bring an end to the seemingly endless gains within the crypto market – Photo: Shutterstock

Bloomberg Intelligence analyst Mike McGlone believes that Bitcoin will no longer be seen as a “risk asset” after predicting it will firmly hold its position as one of the most stable cryptocurrencies in 2022.

McGlone, who shared his perspective on the state of the crypto market on Bloomberg’s Wolf Of All Streets podcast, believes that as the US Federal Reserve looks to spike interest rates to combat soaring inflation – currently at a 40-year high in the United States – that this could potentially limit the endless gains within the stock and crypto market.

“What I think is happening is that the [US Federal Reserve] will jawbone until the market does the job for them, or they have to keep raising rates until the markets go backwards,” the analyst stated.

Bitcoin “least dangerous” crypto

Bitcoin is the least risky crypto, according to McGlone, who also believes that it will be perceived as “digital gold” in the coming years and replace the commodity as a store-of-value asset: “It's a fact that Bitcoin is replacing gold in portfolios,” McGlone pointed out.

And despite BTC dipping below $40,000 at the start of the year, which put several analysts on edge, McGlone predicts that not only will the crypto will remain relatively steady throughout the year, but that it could potentially emerge even stronger as one of the most stable coins in 2022.

“I think it’s transitioning from a risk-on to a risk-off asset. Bitcoin will come out better off.”

The analyst also believes that the market will depend on how the US Federal Reserve approaches raising interest rates, which could be announced as early as March.

​​“The number one theme I’ve been using for months now is ‘do not fight the Fed’”, said McGlone. “If you’re long risk assets, you are fighting the Fed, and cryptos are the riskiest assets. The key thing is, remember, that Bitcoin is the least risky among cryptos.”

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