Bloomberg Strategist Predicts Liquidity Crunch and Bitcoin Correction
Bloomberg Intelligence’s senior macro strategist, Mike McGlone, warns of an impending liquidity crunch that will lead to a recession and a significant correction in the Bitcoin market. In an interview with crypto influencer Scott Melker, McGlone predicts that the Federal Reserve’s hawkish stance to combat inflation will cause risk assets like Bitcoin to plummet.
Key Points:
- Liquidity crunch and recession: McGlone believes the current withdrawal of liquidity is the largest ever witnessed, following an unprecedented injection. He points out that economists who initially predicted a recession due to the Fed’s aggressive rate hikes have delayed their timeline to the end of the year.
- High-interest rates impact: The strategist anticipates that high-interest rates will cause bond yields and the stock market to drop. He draws parallels from historical events, emphasizing the negative money supply, negative producer price index (PPI), and ongoing rate hikes by the Fed.
- Bleeding occasion from Bitcoin: McGlone suggests that Bitcoin should serve as an early indicator of recessionary times due to its role as a leading liquidity pump indicator. He expects Bitcoin to collapse later this year as liquidity declines.
Hot Take:
According to Bloomberg’s Mike McGlone, the US economy is heading towards a recession, and Bitcoin will experience a significant correction. The withdrawal of liquidity and the Fed’s hawkish stance are key factors contributing to this scenario. Investors should closely monitor Bitcoin’s performance as it may serve as an early warning sign for the broader economy.
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