Bitcoin price could accelerate decline for risk assets, says senior macro strategist
Bitcoin is trading just below $28,000 after another rejection near the key technical level of $30,000. Equity futures were largely muted on Monday ahead of a week that is likely to be marked by moves related to reaction to core inflation data.
While analysts continue to offer big bullish price predictions for BTC, such as the one Invezz highlighted here, the current market outlook has some observers pointing to possible declines in the risky asset market – and bitcoin could accelerate those losses.
Why Bitcoin is Falling May Make Risky Assets Lower
According to Mike McGlone, a senior macro strategist for Bloomberg Intelligence, says that the benchmark cryptocurrency could lead to lower stocks and other risk assets. His perspective is that this is likely to be the case if the market sees further catalysts for downside action.
The commodity strategist noted in a chirping on Monday:
“If the worst is not over for risk assets, Bitcoin could lead the way lower. During the global financial crisis, the Nasdaq 100 fell about 55% against its roughly 35% drawdown from late 2021 to December, which has since eased expectations of a soft landing . If that’s all for the bear market, it’s likely to be similar for Bitcoin and crypto. But Bitcoin is up about 70% in 2023 through May 2 vs. 20% for the stock index, and it could be bounced within broader bear markets.”
The Bloomberg analyst says the US central bank “continues to tighten in May”. That’s after the Fed raised interest rates by 25 basis points. Although Fed Chair Jerome Powell hinted at a potential interest rate pause, McGlone believes the central bank may be “more inclined to stay the course”.
Although the consensus for a soft landing may now be priced in, the analyst suggests that the Fed may have to maintain the trend as they look to help inflation – with less risky assets – which in this case would have lose-lose implications for Bitcoin and other risk assets. . Meanwhile, the analyst also points to the growing correlation between Bitcoin and the Nasdaq.
Assets currently have a correlation of 0.42, which is near an all-time high as the liquidity pump that drove markets higher during the pandemic fades. If McGlone’s prediction were to materialize, BTC price could pull back to support zones that would likely include a retest of $25k or lower. The $20,000 area remains the long-term psychological support.
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