A looming catalyst could trigger bitcoin and crypto crashes, warns Bloomberg analyst Mike McGlone
Bloomberg Intelligence Senior Macro Strategist Mike McGlone is wary of crypto assets amid a worsening economic climate.
McGlone says in a new report that cryptos, which are outperforming other assets, could plunge if deflation sets in. According to Bloomberg Intelligence’s senior macro strategist, the deflation risk is increasing.
“It’s been a year of rebounds for just about everything that fell in 2022, with crypto tops among high-beta performers, but a deflationary performance may be gaining fuel as seen in falling commodities and bank deposits.”
Bloomberg Intelligence’s senior macro strategist says cryptoassets face downside risk if the broader stock market falls just as banking stocks have recently.
“Bitcoin, born of the 2008 financial crisis, is facing its first US recession, and if the broad stock market follows the banks, crypto is likely to ebb with the tide.”
On the key levels to watch for Bitcoin (BTC) and Ethereum (ETH), McGlone says,
“The upcoming 24/7 traded leading indicators, revolutionary technologies and assets – Bitcoin and Ethereum – may run into a wall of resistance at the key round-trip levels of $30,000 and $2,000.
Our bias is bullish long-term for the top cryptos, but an overwhelming stock market decline with the Fed tightening into a recession has the potential to lower the tide for all risk assets, with Bitcoin and Ethereum among the riskiest. .”
Bitcoin and Ethereum are trading at $29,286 and $1,913 respectively at the time of writing.
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