by • Bloomberg Analyst Mike McGlone predicts that the worst may not be over for Bitcoin (BTC) due to a US recession expected in the second half of 2023.
• McGlone believes that markets have bounced recently, but their strength is not sustainable and that there will be a broader downward market trend.
• He warns that Bitcoin could dip as low as $7,000 due to liquidity pumps reversing and rising central-bank rate hikes.
Bloomberg Analyst Predicts Worst May Not Be Over for Bitcoin (BTC)
Bloomberg Intelligence’s senior macro strategist Mike McGlone is predicting that Bitcoin (BTC) will drop lower due to recessionary headwinds in the second half of 2023. In a new Crypto Outlook edition, McGlone says that the worst may not be over for Bitcoin, with a potential dip down to $7,000. He believes markets have bounced recently but their strength is not sustainable and there will be a broader downward market trend due to liquidity pumps reversing and rising central-bank rate hikes.
Rising Risk Assets
McGlone suggests that June might show more of the first-half bias for rising risk assets and Bitcoin in what he calls “a worst-is-over scenario” or it could roll over into a US recession as markets appear to have priced in an optimistic outcome from long lags of aggressive central-bank rate hikes which are still rising.
Downward Perspective
He adds that his downward perspective is guided by lessons from liquidity pumps which reverse and are still dumping, as indicated by Federal funds futures in one year (FF13). It may take a decline in equity prices for rates to fall. The high of about $30K seen in 2023 versus the 100-week mean around $33K could see bitcoin feeling gravity from pre-eminent levels around $7K before the unprecedented 2020-21 liquidity boost.
US Recession Expected
McGlone also notes that since the widely expected US recession has yet to start, this could pressure risk assets accordingly. At time of writing, bitcoin is trading for $27074 up 0.7% during the past 24 hours yet he warns it could sink much lower if his predictions come true.
Bottom Line
In conclusion, Bloomberg analyst Mike McGlone predicts that bitcoin’s worst may not be over yet due to an expected US recession which could cause BTC prices to dip lower than its current level at time of writing ($27074). His outlook is based on liquidity pumps reversing and central bank rate hikes continuing while markets appear to have priced in an optimistic outcome from these lags which puts further downward pressure on risk assets like bitcoin (BTC).
