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Bitcoin continues to hover around the $30,000 mark as the cryptocurrency tries to decide whether it’ll bounce higher off its multi-year low or perhaps keep sinking. And while the current environment may a tough one for crypto fans it’ll likely serve a useful purpose in separating the wheat from the chaff, says sector strategist Mike McGlone, who thinks there may be more pain for crypto but the longer-term prospects still look good. It seems so long ago now since the heady days of 2021 when bitcoin shot up like a rocket and hit above $60,000 USD, showing the strength and longevity of what many first saw as a flash in the pan asset class in cryptocurrency, which while taking the world by storm in 2018-19 had yet to prove itself as as either a useful medium of exchange like fiat money or a stable store of value like gold. But after a lull of a couple of years the crypto bandwagon started getting bigger in 2021, with more and more institutional money and influential voices coming out in support of cryptocurrencies. That influx has led to a greater sense that bitcoin et al are here to stay as legitimate investment vehicles. Whether or not there’s more upside to bitcoin is still up in the air, with backers and critics seemingly out there in equal measure. Take investment bankers JP Morgan, whose CEO Jamie Dimon has for years been staunchly against cryptocurrency, calling bitcoin a “fraud” and “worthless.” Yet, at the same time analysts for Dimon’s company have lately been pumping the merits of crypto. Last month, JP Morgan put out a report saying not only that bitcoin was undervalued by 28 per cent and that it deserved a $38,000 price target but that as a whole, the bank was backing cryptocurrencies as now a preferred alternative asset class over real estate. “The past month's crypto market correction looks more like capitulation relative to last January/February, and going forward we see upside for bitcoin and crypto markets more generally," said JP Morgan’s Nikolaos Panigirtzoglou in the note. The fits and starts perceivable in what effectively amounts to cryptocurrency’s first decade in operation may in the long run be seen as necessary correctives and painful lessons on the way to a better tomorrow. In that vein, just as any new industry begins with a lot of players and over time whittles itself down to the manageable few, so too might bitcoin and the rest benefit from a paring down of the field. So says McGlone, senior commodity strategist at Bloomberg, who sees the current downturn in crypto as good for it in the long run. McGlone said a lot has to do with the fiscal tightening being brought forward by central bankers to reign in inflation, particularly through raising key interest rates and thereby turning off the taps for cheap money. That action will have an effect on the market’s appetite for investing in bitcoin. “If you're long risk assets, you're probably going to lose money and one of the riskiest assets, the assets that went up the most in history are our cryptos,” said McGlone, speaking on BNN Bloomberg on Monday. “One thing that's really good about what's happening is we're purging all the excesses of speculation and things like Dogecoin and algorithmic stablecoins that just don't make sense,” he said. “In the future, bitcoin is probably going to be bottoming around a good support and probably is going to be below $30,000, and it's going to enhance that long-term upward trajectory, but we're in early days.” “It's going to take a little while I think we revert back to deflation, which is great for gold and bitcoin and Ethereum which is in the middle, but then there are 19,000 other ones — there was just too much excess in the space,” McGlone said. The number of created cryptocurrencies may number in the thousands but there are perhaps a few dozen in total with significant investment in the hundreds of millions or billions. Altcoins like Binance and Dogecoin have market capitalizations in the tens of billions, while Ethereum has about $215 billion in value and bitcoin’s market cap is at about $570 billion.

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