Bitcoin Predicted to Face Downward Pressure Amid US Recession, Says Bloomberg Analyst

Mike McGlone, Bloomberg Intelligence’s top macro strategist, foresees a bumpy road ahead for Bitcoin (BTC). He warns that looming recessionary threats may pull the cryptocurrency downwards.

In essence, Bitcoin, according to McGlone, could see difficult times in 2023. The anticipated US recession and its ensuing liquidity crunch could exert significant downward pressure on the cryptocurrency. As always, the world of cryptocurrencies is one of high volatility and unpredictability, requiring investors to approach it with caution and strategic planning.

In a fresh edition of Crypto Outlook, McGlone hints at a challenging second half of 2023 for Bitcoin. A liquidity crunch triggered by a US recession could push Bitcoin further into the doldrums. He states, “June may witness the continuation of the first half’s rising risk asset trend, or it could signal a dip into a US recession. Our leaning is towards the latter.”

The Ineffectiveness of Central Bank Rate Hikes

Despite aggressive central bank rate hikes, McGlone believes the markets have overly optimistic views of their effects. His stance is that these hikes, though ongoing, are not doing enough to buoy the markets.

While recent market recoveries may seem promising, McGlone is doubtful about their sustainability. He anticipates that the broader downward market trajectory will persist.

June may witness the continuation of the first half’s rising risk asset trend, or it could signal a dip into a US recession.

A Transient Nasdaq 100 Impact

“The Nasdaq 100 Stock Index’s potential to positively affect all markets might be fleeting,” warns McGlone. He points out the continuous downtrend of this stock index and Bitcoin, highlighted by their 100-week moving averages. He adds that the market is currently rebounding, but he maintains his bearish outlook.

Drawing from historical lessons on liquidity pumps reversals, McGlone advises caution. He suggests that a fall in equity rates might be imminent, and Federal funds futures in a year (FF13) hint at an ongoing downward trend.

The Effect on Bitcoin

McGlone, who earlier cautioned that Bitcoin might plunge to lows around $7,000, now says an imminent US recession could further depress risk assets like BTC. He illustrates how the cryptocurrency’s comfort zone around $7,000 could influence its behavior in the face of 2023’s expected economic challenges.