In the latest edition of Bloomberg Intelligence’s “Crypto Outlook” report, McGlone (and the three contributing analysts he worked with on this research) said:

“It’s been one of the most severe drawdowns in crypto history, yet the Bloomberg Galaxy Crypto Index (BGCI) is still up about 200% since the end of 2019 vs. 20-60% for gold, the S&P 500, the Bloomberg Commodity Spot index and US money supply to Dec 2. The question is how much worse things can get for the space, overdue to cleanse speculative excesses. Our bias is risk vs. reward, with the BGCI tilted toward resuming its propensity to outperform…

“About 70% of the BGCI is Bitcoin and Ethereum, which are notable for definable diminishing supply vs. increasing adoption and demand. Something has to reverse the demand side of that equation, or by the rules of economics, the price should rise over time. A significant dip within an elongated trend is how we expect history to view 2022 in cryptos…

“That the drop in the value of the entire crypto market in 2022 to Dec. 2 — about $1.3 trillion — is roughly equivalent to the market-cap fall of two stocks, Amazon and Google, is indicative of cryptos’ nascent stage. The most aggressive Fed tightening in 40 years is a good reason for the macroeconomic ebbing tide, but 2023 may be about which assets come out ahead as central banks pivot. If they don’t flip to easing, the world may tilt more deeply into recession, with repercussions for all risk assets. Our base case is for an elongated deflationary period, with the crypto market, as measured by the Bloomberg Galaxy Crypto Index, coming out ahead.“