Amidst growing concerns, Bloomberg Intelligence’s senior macro strategist, Mike McGlone, cautions that the worst may not be over for Bitcoin (BTC) as recessionary headwinds could push the cryptocurrency lower.
How recession will hit the entire crypto space, do we see more bloodbaths? Let’s hear McGlone’s version.
Bloomberg Analyst’s Bitcoin Liquidity Forecast
In his latest Crypto Outlook edition, McGlone predicts a liquidity crunch in the second half of 2023, fueled by the anticipated US recession.
McGlone highlights the possibility of a liquidity crunch, indicating that Bitcoin’s current state may not be at its bottom. He suggests that June could either witness a continuation of the first-half rally or roll over into a US recession. With markets appearing to have priced in optimistic outcomes from aggressive central bank rate hikes, McGlone believes the latter scenario is more likely.
First-Half Hope or US Recession?
While recent market bounces have provided some relief, McGlone remains skeptical about their sustainability. He notes the transient nature of the rising Nasdaq 100 Stock Index’s ability to lift all market assets, including Bitcoin. Citing downtrends in the 100-week moving averages of both the stock index and Bitcoin, McGlone questions whether the worst is truly over or if the market should respect the prevailing downward trend.
McGlone’s concerns extend to the broader market, as he emphasizes the potential reversal of liquidity pumps that are still dumping assets. He points to the Federal fund’s futures in one year (FF13) as an indicator of this ongoing dumping. He further suggests that a decline in equities may be necessary for interest rates to fall, reinforcing his perspective on the market’s downward trend.
Bitcoin’s Risky Ride at $7,000?
Having previously warned of Bitcoin potentially dipping as low as $7,000, the analyst reiterates his stance, stating that an expected US recession could further push risk assets, including Bitcoin, downward. He highlights Bitcoin’s high of about $30,000 in 2023, relative to the 100-week mean of around $33,000, suggesting the cryptocurrency may experience gravity from the comfort zone of around $7,000 before the unprecedented liquidity boost of 2020-2021. The impending US recession, which has yet to materialize, could put additional pressure on risk assets.
As of the time of writing, Bitcoin is trading at $27,074, with a marginal increase of 0.7% over the past 24 hours.
