McGlone Suggests Bitcoin Fall as Economic Recession Loom

In a recent interview with Yahoo Finance’s Julie Heyman, Bloomberg Intelligence’s Senior Macro Strategist, Mike McGlone, has expressed concern that Bitcoin’s recent rally might be short-lived due to impending economic recession and the asset’s alignment with the stock market’s performance. Bitcoin, currently hovering around $30,000, received boost recently due to BlackRock’s potential Bitcoin ETF launch.

“The key reason it had this bid recently because the BlackRock– the BlackRock application for ETFs. Most people think that means they will be approved in the US. But that’s still an if statement. It might not happen this year,” said McGlone.

He went on to explain that Bitcoin’s performance is a mirror reflection of the stock market’s trends, rising with the liquidity boom after COVID-19 and now rebounding alongside the stock market. However, McGlone offers a word of caution for Bitcoin investors, warning that a potential U.S. economic recession could cause a significant drop in Bitcoin’s value given its status as a risk asset.

“For it to show divergence strength away from the stock market, I think it has to probably get through this recession, which we all know is coming. If you look at the yield curve, it’s a matter of time. And to see if it can show divergence strength with the stock market going down as the Fed has pointed out. They are not going to be there to cut rates, which probably is bearish for equity markets,” McGlone cautioned.

Expressing skepticism about Bitcoin’s ability to hold its value above $30,000 in the near to medium term, McGlone stated, “Well, I’m much more worried that of the whole tide going out because of this recession and the risk that everybody’s priced in for the bullish scenario.”

On the subject of regulatory scrutiny on cryptocurrency, McGlone views it as a temporary pushback against a revolutionary technology that is not yet fully understood. However, he believes that the crackdown is necessary to curb the space of excessive speculation.

McGlone went on to say, “It’s going to last for a while, but this is a revolutionary technology. And oftentimes, that’s what humans do when something comes in that they don’t understand. Which is OK. The key thing about the crackdown I think is prudent is we have to purge some of the massive speculation in space.”

Finally, the strategist discussed traditional commodities, notably oil, and how geopolitical tensions, like the recent coup attempt in Russia, influence their prices. He indicated that commodities are in a bear market, with the only potential commodity to perform well in the near future likely being gold, particularly if the world leans into a recession. “I see crude oil is more likely to head towards 50, maybe even 40 priced on what has already happened… I think the best commodity might be continue to perform well in the next year or so is probably gold as we tilt towards recession,” McGlone concluded.