Bloomberg Analyst Warns of Crucial Test for Bitcoin (BTC)

Bloomberg Intelligence’s senior macro strategist, Mike McGlone, is sounding the alarm about an upcoming significant challenge that Bitcoin (BTC) is expected to face during the second half (2H) of 2023.

With a strong performance in the first half of the year (1H), McGlone predicts that Bitcoin will now confront a period of economic downturn in the next six months.

Sharing his insights with his 58,800 Twitter followers, the macro expert highlights that as the stock market begins to decline, Bitcoin will have an opportunity to prove its worth as a reliable store of value, often referred to as “digital gold.” The key will be whether Bitcoin can avoid dipping in value along with equities.

McGlone points out that Bitcoin’s impressive 84% gain in 1H outperformed the Nasdaq 100 and demonstrated consistent risk-adjusted volatility. However, it is during the second half of the year that Bitcoin’s true potential will be defined. It will either be seen as a high-beta version of the stock market or establish itself as a digital gold asset in a world moving in that direction.

The strategist admits to having a somewhat neutral stance, indicating that the real test for Bitcoin is likely to come when the stock market experiences a bear market, which is typical during US recessions. This test will determine Bitcoin’s resilience and ability to act as a reliable investment option.

Moreover, McGlone cautions that this time around, the Federal Reserve may hesitate to ease monetary policy, unlike in previous recessions. This reluctance is primarily driven by concerns over high inflation rates. In past economic contractions, the S&P 500 experienced significant drawdowns of approximately 50%, which were accompanied by substantial easing measures from the central bank. However, this dynamic may have changed. Bloomberg Economics suggests that due to stubborn inflation, the Fed is unlikely to pursue easing measures. A graphic presented by McGlone depicts Bitcoin hovering around the $30,000 pivot, lagging behind the Nasdaq’s second-quarter surge.

As the second half of 2023 unfolds, Bitcoin’s ability to weather economic challenges and demonstrate its value proposition as a potential digital gold investment will be under scrutiny. The outcome will shape the perception of Bitcoin as either a closely linked high-beta asset or a reliable alternative investment in an evolving financial landscape.

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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.

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