Bloomberg’s macro strategist Mike McGlone says that he believes incoming recessionary pressures could cause Bitcoin to retest the $20,000 level. McGlone warned that Bitcoin’s recent rally above $31,000 is running against a powerful headwind.
“Bitcoin $20,000 or $40,000? Facing the Fed, Recession, Nasdaq – Potential launch of U.S. ETFs won’t shield Bitcoin from facing its first U.S. recession, a potential equity bear market, and vigilant central banks. Lessons of risk-assets vs. negative liquidity and economic contraction,” he said.
At the time of writing, Bitcoin was trading at $30,698, up by 16% in the last seven days.
McGlone added that liquidity continues to drain out of the markets, with many central banks outside of the U.S. increasing interest rates this month.
“Bitcoin’s key pivot point has been around $30,000 since 2021 when most risk assets appreciated on the back of the biggest money-supply surge in history. That liquidity rug-pull is still happening, with most central banks continuing to tighten in June, could be a headwind, even as risk assets have bounced on hopes for a mild U.S. recession and easing by the Fed,
McGlone said that Bitcoin is trailing the recent Nasdaq 100 Stock Index gains, which may have peaked. He added that federal funds futures in one year (FF13) show little potential for additional liquidity fuel.
On the recession, the macro strategist warned that there are economic signals that a recession could arrive within months.
Earlier this month, McGlone said that the worst might not be over for Bitcoin, predicting a liquidity crunch in the second half of 2023 due to an expected U.S. recession.
Meanwhile, another top crypto analyst believes that Bitcoin may have more room to run after crossing the $30,000 level.
Produced in association with Benzinga
Edited by Asad Ali and Saba Fatima