Crypto Analyst Warns Of Impending ‘True Test’ For Bitcoin
According to senior macro strategist Mike McGlone from Bloomberg Intelligence, Bitcoin is expected to confront a significant challenge during the latter half of 2023.
Addressing his 58,800 Twitter followers, McGlone predicts that following a powerful performance in the first half of the year, Bitcoin is confident to face a challenging economic falloff over the next six months.
Looking forward to a decline in the stock market, the macro expert forecasts an opportunity for Bitcoin to establish its character as a store of value, frequently mentioned as “digital gold” by persistence and not following the bottom-ward trend of equities.
Bitcoin’s outstanding 84% gain in the first half of the year exceeded the Nasdaq 100 by double and maintained a stable level of annual volatility. However, it is the second half that holds the key to defining this benchmark cryptocurrency as besides a high-beta version of the stock market or the true essence of digital gold in a progressively digital-centric world.
Macro holds a moderately neutral standpoint, acknowledging that a meaningful trial for Bitcoin may arise when the stock market necessarily enters a bear market, as commonly observed during US economic downturns.
McGlone adds a cautionary note, highlighting that the Federal Reserve swiftly implemented monetary policy measures to bolster the economy in previous panic periods. However, the central bank may hesitate to act similarly this time due to the persistently high inflation levels.
In the two apparent economic downturns witnessed as long as the beginning of the new millennium, the S&P 500 experienced substantial declines of approximately 50%, accompanied by special monetary easing measures from central banks.
However, there is a shift in this trend. Bloomberg Economics highlights that the Federal Reserve will unlikely follow easing actions due to persistent inflationary pressures. Visual representation illustrates Bitcoin hangs around the pivotal $30,000 mark, even lagging behind the Nasdaq’s second-quarter rise afterward.
As per McGlone’s investigation, A fading crypto market was already revealed in the second quarter of the year as equities earned while the leading digital assets, monitored by the Bloomberg Galaxy Crypto Index, experienced a decline.
Insights for the Midyear Cryptos’ ongoing gains in the stock market pose an inherent challenge for cryptocurrencies. The fact that the Bloomberg Galaxy Crypto Index experienced a decline in the second quarter, despite the significant revival in the Nasdaq 100 Stock Index, indicates disparate weakness in the crypto market. Crypto Index dropped by 2% compared to the 15% gain in the Nasdaq 100 Stock Index during the second quarter. Bloomberg Galaxy showcases the relative weakness of cryptocurrencies.
And visual representation illustrates the BGCI lingering below its peak level from 2017, while the Nasdaq 100 continues to rise higher, even in the face of the Federal Funds Future in one year, indicating further caution.
McGlone shares that challenges lie ahead for risk assets such as Bitcoin, as Bloomberg Economics forecasts a recession in the latter half of the year. And predict that US unemployment will rise to 4.3%, surpassing the current rate of 3.6%.
Until today Bitcoin is being traded at $30,415, reflecting a 1.2% increase over the past seven days.
