U.Today – is currently down 15% in the third quarter of 2023, despite U.S. Bitcoin spot ETFs moving closer to approval and a buoyant stock market. Bitcoin might be telling us something, Bloomberg strategist Mike believes.
In an analysis provided on X, McGlone explains what the recent Bitcoin price weakness might be portraying. In this regard, Bitcoin might be a leading indicator for a severe economic reset, as seen in its extraordinary pump and then dump in liquidity. Recessions typically entail falling risk assets and central bank easing.
According to him, cryptocurrencies came of age during an unprecedented period of zero-interest-rate policies. Now that this is reversing rapidly, there are also implications for prices. Thus, it may be logical for digital assets to revert when rates rise.
The Bloomberg strategist added that Bitcoin’s relative weakness may be following the path of least resistance on the back of rapidly rising rates.
To emphasize his point, McGlone stated that Federal Funds futures were priced at roughly 5.45% in November, compared to an average of 0.6% from 2011 to 2021, when Bitcoin appreciated from $1 to a peak of almost $69,000. It should be recalled that Bitcoin attained all-time highs of nearly $69,000 in November 2021.
On the probable Bitcoin price direction, McGlone referred to BTC price action before the unprecedented liquidity pump of 2020–2021, when consolidated around the $10,000 price floor. He noted that the downside price risks might be leaning toward this foundation, which might imply a period of consolidation before a rise.
According to the Bloomberg expert, “Bitcoin may need to show relative strength for us to tilt towards the big picture of limited supply and increasing adoption for the digital asset.”
Since the SEC its decision to delay all spot ETF decisions until October, Bitcoin’s trading has been lackluster and continues to be so at press time.
The biggest cryptocurrency by market capitalization, Bitcoin, is currently marginally up 0.20% in the last 24 hours to trade at $25,682.
