 What's up everyone? It's Giovanni. Welcome to another coin telegraph interview. Today I have the pleasure to be joined by Mike McGlone, senior commodity strategist at Bloomberg, who is going to give us his outlook for crypto in 2022. How are you doing Mike? Hello Giovanni and thanks for having me. So let's start with your expectations for the end of 2021. So in September last year you said that Bitcoin had very good chances to get to $100,000 by the end of the year that scenario didn't played out obviously. Are you surprised? I'd say less surprised how you define it maybe more disappointed. I think Bitcoin's going to $100,000. It's the question of time by simply watching the trajectories of declining supply, which is a known known increase in demand and adoption. And I think it just got a little bit too speculative excessive. The whole space did. So here we are now around $40,000. It seems to be in a very comfortable zone within a pretty elongated bull market. So let's talk about your outlook for 2022 now. In your recent report that you recently published, you said that Bitcoin is going to reach $100,000 in 2022. That's a pretty bullish position considering the overall quite bearish sentiment. So a lot of analysts are saying that this year is not going to be very good for Bitcoin and crypto, especially because of the monetary policy that are going to change in the US. So the Fed is going to tighten its monetary policy, reducing the liquidity circulating in the market and rising interest rates to fight inflation. And that's usually a bad scenario for risk on assets such as Bitcoin and crypto. So are you, what do you think about these concerns? Well, I'm comfortable being against consensus that you see the way I am and is how often is the consensus right and set things like the stock market. And the way I look at it, to me, the main theme that's I really started kicking in Q4 last year is long risk assets is fighting the Fed. Cryptos are among the riskiest of assets. They certainly got as expensive and speculatively excessive last year. But Bitcoin is the least risky among cryptos. And Bitcoin is in a unique stage and phase, I think, of transitioning from a risk on to risk off global digital store value, replacing gold and becoming global collateral. So I think that's going to be happening this year. I fully expect, I look at it as a dream that the Fed will be able to tighten four times because I fully expect the stock market will wobble and stop them from tightening because that's the problem now. We have the highest inflation in 40 years and Fed's got to do restraint. We have an emboldened Federal Reserve Chairman, Chairman Powell, who said he is concerned about how the market views his actions 25 years. So that means he has to fight inflation, which means the main target for that is the stock market. It's got to stop going up or the Fed will just keep rising rates until inflation goes down and the stock market stops going up. That's just a fact of history. But Bitcoin fits in, I think, very well in that space. I think Bitcoin is gaining traction with the world knowing that it has to get off zero. More allocators are looking to buy it on dips. We're seeing the shorter term speculators getting stopped out. And I think it's building a pretty good base here around 40,000. It's more likely to appreciate towards 100,000. So you're a strong proponent of Bitcoin as digital gold. This narrative has been around for the last couple of years, at least since the beginning of 2020. We've been hearing about this vision of Bitcoin replacing gold as a safe haven asset, so an asset that preserve value. Still, in the last couple of years, there were very fortunate circumstances for Bitcoin because of the monetary policies, because of the pandemic. So we saw the monetary policies propping up the price of Bitcoin. But this year, when we're going to see a reversal in these monetary policies, do you think that this is going to be the year where Bitcoin is going to have to prove whether it's fit or not the definition of digital gold? Well, it has been proven. The key facts are there's outflows and total known gold ETFs, pretty significant outflows. And there's inflows, clear, pretty significant inflows into Bitcoin from all measures of investors, economy, sovereign wealth, treasuries, pension funds, endowments, you name it, individual investors. You ask your typical millennial these days. They don't care about gold. They care about Bitcoin. So that is a clear trend. I think it's going to accelerate. That's just a simple extrapolation to the future of the existing trend. That's nothing profound. And it's good solid reasons for that to continue partly because the world's going digital. Bitcoin is becoming the digital global reserve asset. And there we have it. So it's not that complicated. It's basically a digital, the most significant digital property right in the world with things like NFTs and all the other cryptocurrencies also representing digital property, right? So to me, that's just part of the natural progression of society, advancing technology and Bitcoin's right in the center there. And it has that unique store value attribute that people like Michael Slayer have pointed out. So I fully expect that to continue. There's going to be bumps in the road. What I do like this period of, it's basically been at $43,000 right now at the same price as February. And I like the increasing bearish sentiment in a market that I see as an enduring bull market. And it's just at this level and that support. And it's usually you get the bearer sentiment from people who are impatient and speculatively and leveraged long. And that's usually where they provide the stops for the longer term, more rightful owners to buy and hold. Okay. So as far as I understand, you see the current moment as a period of consolidation for crypto and Bitcoin. We're talking about Bitcoin. The crypto market, there's 16,000 crypto currencies. There's massive speculation that dog coins are a serious example last year of too much speculative access in the space. And that's a problem. Simple rules of economics do not favor prices of a market where there's unlimited supply and ease of entry. That's the crypto market. Like I said, 16,000 a year before those eight, year before there's four. I'll go back to my main stalwarts, Bitcoin, Ethereum and crypto dollars. I fully expect to continue to dominate. Okay. That's interesting because it leads me to my following question, which is about the dominance of Bitcoin in the crypto market. So if we look at the price right now of Bitcoin, it's pretty similar to the one it was one year ago exactly. Still, if we look at the dominance of Bitcoin, then we see a completely different picture because one year ago, the dominance of Bitcoin was around 70%. While now it's hovering around 40%. So it's been a huge drop in Bitcoin's dominance. How do you interpret this figure? Do you think that's a sign that Bitcoin is not anymore the best horse investor should bet on? It's the maturation of the advent of the nascent technology. And I think one thing that the dominance of Bitcoin is not so much significant as what's happened in the entire space. Why has the Ethereum gone to maybe 10% to 20% dominance, not almost 20%. Why? Because it's creating the infrastructure for that rising tide of fintech decentralization, DeFi. The problem is there's 16,000 wannabes and there's massive speculation in those space, which is maybe pressuring Bitcoin. There's going to eventually some point of that will go away. We all know rules, economics do not favor unlimited supply and ease of entry. So for now, sure, there's going to be a lot of people getting hurt. What happened to Dogecoin and Shibulino, I think they're going to go away. But Bitcoin will always maintain that gold-like attribute in the world that's going digital. And it's basically pushing away the old guard gold. And I fully expect it to continue to become a greater portion of the world's investment portfolio. Okay, so what is the level of support that we should look at in order to be confident about your prediction? So I think it's building a good base here around 40,000. And I think it's going to take that level and it's more likely to accelerate towards 100,000. Now if we get a significant risk off swoon like we did in 2020, I think 30,000 is pretty much the extreme low. I don't think we're going to see that. And I think it's more likely to appreciate break above that 50,000 of resistance and continue towards 100,000. That's very much not profound. It's just what it's been doing for a long time. And I like to point out the facts of the fundamentals are positive, technicals are positive. I do like the fact that it's basically the same price as it was since February and sentiment I sense is getting very bearish as I can sense from your questions, which is the one thing I like of spending markets for a long time as a markets guy. I see a fundamentally strong bull market. I see sentiment in a shorter term getting bearish at support. That's usually a good sign for markets to recover. Okay, now I would like to ask you about Ethereum. So you predict that Ethereum will reach $5,000 in 2022. What are the factors that you are looking at in order to back up these expectations? Ethereum did something similar to Bitcoin. It has decreasing supply, increasing demand and adoption. But it's in a much different space. It's not the global macro store value. It's basically becoming the collateral of the internet. And so what I see for Ethereum is one of the key indicators I look for Ethereum is when I look at NFTs, there's so many of them, they're somewhat confusing. But the bottom line for me is they're all denominated in Ethereum, which means demand for Ethereum. And to these that are buying NFTs, like you're hearing from a lot of major corporations have to buy NFTs, have to buy Ethereum. Then I look at crypto dollars. The wrong word, I think, is stablecoins. All these so-called stablecoins track crypto dollars and virtually all of them are denominated in Ethereum, which is another demand source and shows the the value of Ethereum. So I think that's the difference. Ethereum will continue to appreciate in value kind of, you know, saying it gets above 5,000 is not that profound because that's kind of was the key level of bumping up against this year versus Bitcoin doing a double. But in Ethereum, it was up almost 5x last year. So that I don't see going the way it's gaining that dominance in the space in terms of the technology of the world of fintech. So yeah, there's going to be some competition. That's what happens with success. The bottom line I see in this space, and this is what I think is going to eventually happen is the SEC will eventually prove an ETF that tracks an index that tracks the broad market, maybe the top 10 or 12. To me, it's the proper thing. That's what investors want. They don't want to try to pick winners. Let the index track the winners and kick out the ones that don't do well. To me, that's what we're going. We're in early days. But just the fact that the SEC finally approved a futures-based US ETF shows a baby step. It's all going there. And the fact that funds are leaving the US now means a matter of time. The bottom line I want to leave with you is the fact that China has banned cryptos and banned Bitcoin mining is more likely means a Western world will embrace and US will embrace. And that's just what's been happening. I fully expect that to continue in 2022. So that's very interesting what you said about this future index that will combine several different cryptocurrencies. And then people won't have just to bet on a single cryptocurrency. They will be able to invest in this index. Still, we just saw that SEC approving the very first future Bitcoin ETF last year. So I think we are still very far away from that index you're talking about. I don't think it's something that we're going to see in 2022, are we? Well, I don't know. I mean, it's just one thing. A few things motivate a country more than when it's our tribe that was doing the opposite. And that's doing the opposite of what China has. So this is something when we launched the Bloomberg Galaxy Crypto index in 2018, this was our vision. So here we are four years later. It's getting closer and it's happening just a matter of time. So that's to me is how early days this is and how we look at Bitcoin at 40,000 and hovering here for years. So bullish because there's so many bullish dangling carrots look forward to, Giovanni. I just see that is coming. I see increasing adoption and the decline in supply. And I think most risk managers get it. They just have not had the best way to do it. The tax laws are a bit somewhat restrictive in this country, but the rest of the world is getting it. Most of the world are jumping on board. And it's even happening here a lot in Asia. I don't know what stops it. And that's why I look at sometimes the daily fluctuations and prices just kind of noise in the bigger picture macro. And when I see a price at the same place as a year ago, I see that's great. And the macro to me is only positive. I only see positive dangling carrots for Bitcoin partly because everything is trending that way that the US will continue to adopt. The key thing I'll leave you with is the fact that funds from like Fidelity and ARC investments are leaving the country for Canada is major pressure for US legislators and leaders to say, okay, let's not mess up this new technology, let's embrace it. And the fact that China is abandoned means the US will embrace it. And that's my view. So your position seemed to be very similar to the one of Kevin O'Leary we had on our show not long ago. He is also very much convinced that regulators in the US will have no choice but to embrace this technology. Now I would like to discuss the competitors that are on the market right now. So you seem to be very much focused on this, as you said, three Musketeers that are Bitcoin, Ethereum and the crypto dollar, so stablecoins. Still, we saw in 2022, a number of very strong horses coming up, especially competitors of Ethereum, alternative layer one solutions, such as Solana, such as Avalanche. So is it wise to dismiss those as mere speculative bets? It's wise to dismiss the dog coins, for instance, Shiba Inu and Doge. Those are just silly speculative excessive play money. That's fine. You can play with all those ones. Now Solana, I'm not dismissing Solana. I'd like the Bloomberg Galaxy index and most index is to track Solana because I see on the screens it's number five in CoinMarketCap.com. Now the difference is a year ago, the top five included XRP, I think it was Bitcoin Cash. And then a few years before EOS was in the top five. So I'm just pointing out facts of trends that we have a lot of these coins that jump up into the top five or 10 and then get pushed away. So that's the trend. Now maybe Solana is different. These things are different, but that's why I have to be careful if I'm an investor, focus on an index. Don't try to pick winners. Good luck because I'm not good enough to do that. An index that tracks the top five or top 10 maybe. But the stalwarts I fully expect to will maintain their dominance. That's Bitcoin and Ethereum prices advance and the proliferation of crypto dollars. The rest of them are just much less lower probability. And the facts are we've had so many pumps and dumps of the main ones. And I'll leave you with this. When Dogecoin peaked in around Able, it was a good sign of a peak in the entire market. And when Shiba Inu peaked in, maybe it was at October or so, again, it was also a good sign of a peak in the entire market because of just too much massive speculation. Get a purge of that and then let the building begin just like we had when we ended up with things like Amazon and Google and stuff like that. Okay, that was cool, Mike. Thanks a lot for your crypto outlook for 2022. Thank you for having me, John Giovanni. I'm looking forward to our next one.