Mike McGlone, a Senior Commodity Strategist at Bloomberg Intelligence (Bloomberg’s research arm on the Bloomberg Terminal”), says that Bitcoin’s current price is approaching “extreme discount” territory relative to 2018 and 2020 lows.
According to a tweet by McGlone, the price of Bitcoin is on the verge of reaching strong support, constituting what has historically been an “extreme discount.” McGlone’s tweet and accompanying chart shows that Bitcoin is hovering below its 50-week moving average (MA).
McGlone says that 20% below the 50-week MA has often resulted in “good price support.” The last time Bitcoin was at such a discount relative to its annual average was during the crypto winter of 2018 and the price collapse in March 2020.
Despite the price of Bitcoin and other top cryptoassets falling to roughly 50% of their all-time high, McGlone is confident that 2022 will provide a “firm foundation” for crypto prices. In a tweet last week McGlone noted that rising inflation and asset prices along with the tensions between Russia and Ukraine could lead to a proliferation in crypto dollars.
McGlone explained that Bitcoin was beginning to show divergent strength relative to equities, which have suffered from the geopolitical uncertainty brewing in Eastern Europe and looming Federal Reserve interest rate hikes.
As for Ethereum, on February 17, he said:
“If armed conflict erupted in Europe, the U.S. dollar could be a primary beneficiary; but in cryptos, the buck has already won. The fact that Ethereum made crypto dollars possible, along with the escalating use of the technology to transact greenbacks, supports Ethereum’s price.“
DISCLAIMER
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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