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Bloomberg Intelligence’s senior macro strategist, Mike McGlone, foresees potential economic challenges. Analyzing Bitcoin’s performance, he highlights alarming trends that suggest we might be heading into uncertain financial times.
McGlone shared with his vast audience on social media platform X about Bitcoin’s unsettling disparity with the Nasdaq 100 Stock Index. With Bitcoin dipping by around 15% in the third quarter up to September 1st, as opposed to Nasdaq’s 2% rise, McGlone senses possible upheaval. He states, “Bitcoin has dropped about 15% in third quarter to September 1st vs. a 2% gain in the Nasdaq 100 Stock Index. Weakness in the benchmark crypto could be a precursor for a normal stock market drawdown in a recession or simply falling behind. My bias is the former, notably when considering how far risk assets have come since the financial crisis and what got them to current levels – very low-interest rates.”
The federal funds futures rate, reflecting investors’ sentiment on impending federal funds rates at contract’s end, insinuates more impending Federal interest rate boosts. This could add to the financial volatility.
McGlone also points out Bitcoin’s performance parallels with Japan’s Nikkei 225 index, adding to his crypto concerns. Drawing attention to the alignment, he mentions, “Bitcoin has had a close directional relationship with the Nikkei 225, and recent crypto weakness may portend contagion. That or the benchmark crypto might recover and follow the path of the Nikkei, which reached a 33-year high in June. Our bias is to heed the leading-indicator inklings of Bitcoin and respect the downward-sloping 100-week moving average.”
McGlone does suggest a ray of hope, mentioning that if Bitcoin can recapture the $31,000 mark, it could spell a bullish turn. However, with central banks, including the Fed, in a tightening mode, he expects Bitcoin’s decline to persist. At the moment, Bitcoin’s value stands at $25,732, as per CoinMarketCap‘s records.