- Bloomberg’s senior commodity strategist Mike McGlone believes that Bitcoin’s (BTC) price movement in the third quarter could be a leading indicator of what could happen in the stock market.
- After months of relative strength (2% increase) against the Nasdaq 100 index, Bitcoin started showing relative weakness in the past two months and dropped 15% in the third quarter until September 1st.
- Most Bitcoin analysts and enthusiasts expect the best-performing asset to repeat the price movement of the previous cycle related to the event known as the ‘Bitcoin halving’.
Bitcoin’s price performance in the third quarter of the year can provide clues about the direction of the stock markets in the US.
Bitcoin Recession Could Be Seen in US Markets
Bloomberg’s senior commodity strategist Mike McGlone believes that Bitcoin’s price movement in the third quarter could be a leading indicator of what could happen in the stock market, following the outperformance of the Nasdaq 100 futures index against BTC in both July and August.
In an analysis shared by Bloomberg Intelligence on September 5th, McGlone asks, “Does one of the best-performing assets in history tell us something?”
In particular, after months of relative strength (2% increase) against the Nasdaq 100 index, Bitcoin started showing relative weakness in the past two months and dropped 15% in the third quarter until September 1st.
Mike McGlone explains that this significant divergence could lead to two possible outcomes due to Bitcoin being the best-performing asset in history:
- The stock market follows Bitcoin’s poor price performance in a slump; or
- Bitcoin continues to underperform against the Nasdaq 100 at a unique moment for both markets.
According to the analysis, they believe that the most likely scenario is ‘1’ because Bitcoin has had the ability to grow within the reality of low interest rates throughout history and they think that a general slump caused by high interest rates could also affect the stock market.
Interestingly, in an analysis shared on August 21st, the commodity expert showed that the Bitcoin price chart resembled the stock market chart of the 1930s following the major crisis of 1929, indicating a possible major slump for the leading cryptocurrency.
Bitcoin Halving Cycle
Meanwhile, most Bitcoin analysts and enthusiasts expect the best-performing asset to repeat the price movement of the previous cycle related to the event known as the ‘Bitcoin halving’. This event occurs when the block reward paid to Bitcoin miners is halved through money printing, reducing the effects of supply inflation in the digital commodity.
With a circulating supply of approximately 19.48 million, if Bitcoin reaches its all-time high market value, the value of one BTC would be close to $66,838. This represents a possible increase of 160% from the current price of $25,747 at the time of publication.
In addition to the majority of positive expectations, there are also some analysts who draw attention to a possible change in Bitcoin’s performance within the halving.
