- Mike McGlone, Senior Macro Strategist at Bloomberg Intelligence, has issued a warning that Bitcoin’s price could experience a drop of over 60%.
- McGlone argues that there is a high likelihood of the United States facing a recession by the end of 2023.
- The strategist also identifies significant risk for the broader cryptocurrency market, speculating that a market downturn triggered by a recession is possible.
Senior Macro Strategist Mike McGlone from Bloomberg Intelligence explained that Bitcoin could experience a deep price decline: How will this happen?
McGlone Evaluates the Possibility of a Fall for Bitcoin
Mike McGlone, Senior Macro Strategist at Bloomberg Intelligence, has stated that Bitcoin could see a significant price drop of over 60%. McGlone attributes this potential decline to negative liquidity and rising global interest rates, which he views as the main reasons behind this outlook, despite signs of a recession.
McGlone contends that there is a high probability of the United States experiencing a recession by the end of 2023. He defines a critical resistance level for Bitcoin as $30,000 and suggests that the cryptocurrency is more likely to fall toward the $10,000 range.
The strategist also highlights significant risk for the broader cryptocurrency market, speculating that this risk could result in a market downturn triggered by a recession. McGlone views the weakness seen in the crypto market in the third quarter of 2023 as either a temporary setback or an indicator of a recessionary trend. Given that most risk assets have shown gains in 2023 but turned to declines in the last quarter, he is inclined to adopt this interpretation.
McGlone notes that central banks worldwide continue to tighten monetary policies despite signs of economic contraction in the United States and Europe, seeing these developments as having deflationary effects.
Drawing parallels with financial history, McGlone points out that the Bloomberg Galaxy Crypto Index (BGCI) has underperformed, suggesting that this could be a result of changes in an asset class based on zero interest rates. He recalls that in 1987, US Treasury yields rose, which occurred just a week before a market crash, and crude oil prices peaked in July 2008. McGlone suggests that similar patterns could be observed for Bitcoin, particularly since historical fluctuations in Bitcoin prices have historically occurred before changes in Federal Reserve policies.
Bitcoin’s Changing Role
Last week, Jamie Coutts, a cryptocurrency market analyst at Bloomberg Intelligence, discussed Bitcoin’s evolving role in the global asset allocation landscape. Coutts anticipates increased market volatility influenced by current trends such as yields, the US dollar, and global M2 money supply. He notes that since 2020, Bitcoin and Gold have experienced a decrease in their volatility profiles, which sharply contrasts with significant volatility increases of 53% and 33%, respectively, for global fixed-income assets and equities.
Coutts also points out that Bitcoin’s volatility profile has shown a slight downward trend since 2017, which historically becomes more pronounced when macroeconomic factors come into play. The rising US dollar and 10-year Treasury Yields, the decline of a unified global M2 money supply, and Bitcoin’s potential to improve risk-adjusted returns are seen as factors in this trend. Coutts suggests that holding cryptocurrency during a bear market, which covers the past two months, has been beneficial.
Coutts advocates for Bitcoin to be considered a currency and not subject to capital gains taxation. This would represent a significant change, given that cryptocurrencies are generally treated as property or investments, and owners often have to pay taxes on gains resulting from a sale.
