Bloomberg Intelligence’s senior macro strategist, Mike McGlone, has recently issued a cautionary message to investors regarding the latest correction observed in Bitcoin (BTC).
McGlone, addressing his extensive social media following on the platform X, has raised concerns about the cryptocurrency’s ascent to prominence within an environment characterized by zero interest rates. He suggests that this scenario may pose challenges for the emerging crypto industry as loose monetary policies undergo a rapid reversal.
According to McGlone, the decline in Bitcoin’s value, despite the renewed prospects of future exchange-traded funds (ETFs), could potentially signify the onset of a liquidity crisis. He observes, “The reversal of the zero-interest-rate policy (ZIRP) is occurring alongside the presence of cryptocurrencies, with Bitcoin exhibiting a downward trajectory. Cryptocurrencies matured during an unprecedented period of zero-interest-rate policies, which are now rapidly reversing, thus impacting price dynamics.”
Despite the proximity of US spot ETFs to approval and a robust stock market, Bitcoin has experienced a 15% drop in value in the third quarter, up to September 6th. McGlone suggests that this may be indicative of a more profound message: “The cryptocurrency, traded around the clock, could potentially serve as a leading indicator of a significant economic reset, reminiscent of the extraordinary surge and subsequent decline in liquidity.”
Last month, a judicial ruling mandated that the US Securities and Exchange Commission (SEC) reevaluate its stance on approving Grayscale’s application to establish a Bitcoin ETF, aiming for consistency in its decisions.
McGlone’s analysis encompasses Bitcoin’s remarkable journey from $1 to its all-time high of $69,000, occurring during an era of low interest rates. Consequently, it appears plausible for the leading cryptocurrency, with the largest market capitalization, to experience price fluctuations during periods of rising interest rates.
He elaborates, “It may be reasonable to expect that a revolutionary digital asset/currency, which came to prominence during an unprecedented period of zero and negative interest rates, would undergo a partial retracement as interest rates begin to ascend. Bitcoin’s apparent vulnerability may align with the course of least resistance, influenced by the swift increase in interest rates.”
As of the time of this writing, Bitcoin is trading at $26,226, reflecting a 1.9% increase in the past 24 hours.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.