In brief

  • Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, expressed some thoughts on Bitcoin today.
  • Institutional demand could be integral to the cryptocurrency's upside, he said.
  • If true, investment activity from major firms like MicroStrategy can provide insight into Bitcoin's price outlook.

Mike McGlone, senior commodity strategist at Bloomberg, examined Bitcoin’s potential upside on Twitter today. He described Bitcoin as a standout fixed-supply asset that is set to be a primary beneficiary of equity and bond prices. 

McGlone has previously spoken about how Bitcoin and the stock market relate to each other. Cryptocurrency typically does not have much of an effect on equity prices, he has said, but Bitcoin does stand to benefit from any stimulus caused by the stock market trades extending beyond their usual timeline.

“#Bitcoin  is a standout fixed-supply asset that should be a primary beneficiary in a period of limited potential further upside in equity and bond prices, in our view. #QE juxtaposed vs. tightening Bitcoin supply leaves adoption and demand as the top price-outlook metrics,” McGlone said. 

In conversation with Decrypt, Jason Deane, an analyst at Quantum Economics, said McGlone is “alluding to the ‘hardness’ of Bitcoin supply when compared to all other assets, especially bonds and equities, which he may also be implying are overvalued.” 

As Bitcoin’s total supply is known at all times, future forecasts can be calculated using precise figures, leaving only demand to influence the crypto asset’s price and value. “He believes, as I do, this will be determined by ongoing adoption rates and institutional demand,” Deane added. 

Institutions start investing in Bitcoin

Keeping an eye on big institutional players can therefore tell us a lot about Bitcoin’s price outlooks, as McGlone suggested in his tweet. For example, in 2013, MicroStrategy CEO Michael Saylor said Bitcoin’s days were numbered. Fast forward seven years, and the international investment giant has embraced Bitcoin as an investment-worthy asset. 

In August 2020, Saylor announced that MicroStrategy had purchased over 20,000 Bitcoin as part of the firm’s belief that the economy was entering a “Virtual Wave”, an economic era defined by dematerialization and technological progress. A month later, the firm doubled down with a purchase of a further 16,796 Bitcoin, taking the total amount of investment to over $400 million. 

McGlone also said that quantitative easing juxtaposed with a tightening Bitcoin supply will maintain adoption and demand as the two primary price-variables for the crypto asset. This is similar to gold—something that institutions have noticed.

“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it,” MicroStrategy communicated in a statement explaining their outlook on the crypto asset. Among other advantages, Bitcoin was touted as appealing due to its brand recognition, ecosystem vitality and network dominance. 

These selling points, particularly brand recognition, are hallmarks of why investors have typically been attracted to gold. And, while quantitative easing might sound anathema to some in the crypto space, if McGlone is right, Bitcoin’s price-outlook will be influenced by quantitative easing. And there could be more of that to come.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.