Despite U.S. Bitcoin spot ETFs getting closer to approval and a strong stock market, Bitcoin is now down 15% in the third quarter of 2023. According to Bloomberg strategist Mike McGlone, Bitcoin could be telling us something.
McGlone outlines what the latest Bitcoin price decline may be indicating in a study posted on X. As seen by its tremendous liquidity pump and dump, Bitcoin may be a leading indication for a catastrophic economic reset in this respect. Risk assets often decline during recessions, and central banks ease monetary policy.
He claims that the development of cryptocurrencies occurred over a historically long era of zero interest rate policy. There are also pricing consequences now that this is quickly reversing. Consequently, it could make sense for digital assets to revert when rates increase.
According to the Bloomberg expert, Bitcoin’s relative weakness may be due to the currency taking the route of least resistance as a result of quickly rising rates.
McGlone used the comparison between the price of Federal Funds futures in November and their average price from 2011 to 2021, when Bitcoin increased from $1 to a high of approximately $69,000, to emphasise his point. Remember when in November 2021, Bitcoin reached all-time highs of about $69,000?
McGlone refers to the BTC price action before to the extraordinary liquidity pump of 2020–2021, when BTC consolidated around the $10,000 price floor, while discussing the likely trajectory of the BTC price. He pointed out that this foundation may be where the negative price risks are leaning, which might indicate a time of stabilisation before a rally.
“Bitcoin may need to show relative strength,” the Bloomberg analyst said, “for us to tilt towards the big picture of limited supply and increasing adoption for the digital asset.”
Bitcoin’s trading has been underwhelming since the SEC announced that it will postpone any spot ETF determinations until October, and it is still underwhelming as of this writing.
The most valuable cryptocurrency by market capitalization, Bitcoin, has just increased modestly by 0.20% to trade at $25,682.
