Mike McGlone, the senior macro strategist at Bloomberg Intelligence, has recently warned that Bitcoin (BTC), the largest cryptocurrency by market cap, could face another historic crash from the current price level to $7,000, which is a price not seen since 2020.
According to McGlone in a tweet today, Bitcoin is up relatively 4x from when Federal Reserve started expanding the money supply during the market collapse initiated by COVID-19.
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The analyst added that with the drastic reduction in liquidity and increase in rates, a mean version back to where Bitcoin (BTC) started its rally at around $7,000 is still possible.
If this happens, it will represent an approximately 75% crash for the flagship cryptocurrency.
Captioning a chart with illustrative texts, Mike McGlone tweeted, “That the Federal Reserve has kept hiking rates in 1H despite a bank run, plunging commodities and producer prices may portend deflation potential for risk assets. Peaking Bitcoin and Copper vs. rallying equity markets appears as an unsustainable trajectory.”
That the #FederalReserve has kept hiking rates in 1H despite a bank run, plunging commodities and producer prices may portend deflation potential for risk assets. Peaking #Bitcoin and #copper vs. rallying #equitymarkets appears as an unsustainable trajectory. pic.twitter.com/deEhESQ62u
— Mike McGlone (@mikemcglone11) May 22, 2023
Can Bitcoin (BTC) Become a Risk-Off Asset?
In a new interview with Scott Melker, McGlone discredited the idea that Bitcoin can still become a risk-off asset such as gold under the current financial conditions.
He said the king crypto can’t become a risk-off asset until shows a larger divergence from equities.
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Mike McGlone noted:
“Gold, definitely a risk-off asset. I’m very bullish gold and at some point Bitcoin. The problem I have is all risk assets went down last year and all risk assets went up this year. We’ve only seen little inklings of Bitcoin showing that divergence strength, little inkling. You got to see the big one. You got to see that S&P 500 really drop 20%, maybe go down to 3,000 like copper and Bitcoin not to make a new low…
“So let’s look at the facts of Bitcoin. Right before the massive liquidity pump in 2020, Bitcoin in 2019, the average price was 7,000 bucks. Okay, so it bumps to $60,000. And now we’re $27,000. It’s still 4x the price. We still have a little bit of mean reversion risk and so the way I look at it, this is the kind of market we’re not supposed to be long in any risk assets.”
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