Bitcoin Facing Economic Reset Amid Liquidity Crisis, Says Crypto Analyst

Bloomberg macro strategist Mike McGlone recently shared his insights on the potential repercussions for Bitcoin (CRYPTO: BTC) amid the reversing zero interest rate policies.

In a post on X last Thursday, McGlone discussed the cryptocurrency’s current standing in the face of evolving economic dynamics.

According to McGlone, the buoyant stock market and the growing probability of U.S. spot exchange-traded funds (ETFs) getting the green light have not prevented Bitcoin from facing a downturn.

The digital asset has seen a 15% decrease in the third quarter leading up to Sept. 6. McGlone interpreted the trend as a possible early sign of an impending liquidity crisis, suggesting that the crypto asset might be signaling a “severe economic reset” due to a sharp decline in liquidity.

Expanding on this, the macro strategist brought up a recent court directive urging the U.S. Securities and Exchange Commission (SEC) to reconsider its position on the approval of a Bitcoin ETF by crypto enterprise Grayscale.

McGlone highlighted that Bitcoin’s meteoric rise from a nominal $1 to a staggering $69,000 occurred in a low-interest-rate environment. Therefore, he said, it appears “logical” for Bitcoin to experience a price adjustment in the face of rising interest rates.

McGlone underscored his argument by referring to the federal funds futures, which are projected to reach about 5.45% in November, a significant jump from the 0.6% average noted from 2011 to 2021.This period witnessed Bitcoin’s ascent from $1 to an all-time high of nearly $69,000.

The macro strategist warned that the “relative weakness” of Bitcoin might be following the “path of least resistance” as interest rates skyrocket in a short span.

At the time of writing, Bitcoin was trading at $25,848.67, down by almost one percent in the last seven days. 

Produced in association with Benzinga