Mike McGlone, a senior commodity strategist at Bloomberg, has highlighted Bitcoin’s (BTC) historical patterns of boom and bust, which are closely tied to liquidity. Reports by McGlone, Bitcoin’s current price level of around $27,000 could be at danger of reversion, seeing as that it was only $7,000 at the end of 2019 before the substantial liquidity pump in 2020.
Bitcoin (BTC) Faces Unprecedented Risk?
McGlone’s analysis likewise signifies that Bitcoin’s downward trajectory, as demonstrated by its 52-week moving average, contrasts with the upward tendency it experienced at the onset of the pandemic. This implies that the digital currency is susceptible to booms when liquidity is abundant but vulnerable to busts when liquidity is removed. As a result, McGlone recommends respecting the down-sloping 52-week mean in assessing Bitcoin’s direction bias.
That the #FederalReserve has kept hiking prices in 1H regardless of a bank run, plunging commodities and producer prices may portend deflation potential for danger assets. Peaking #Bitcoin and #copper vs. rallying #equitymarkets appears as an unsustainable trajectory. pic.twitter.com/deEhESQ62u
— Mike McGlone (@mikemcglone11) May 22, 2023
Regardless of the past few bank run, the Federal Reserve (Fed) has tightened twice, which can potentially indicate the central bank’s tenacity, McGlone notes that that slumping copper and digital currencies, including Bitcoin, are paying heed to the warning, which contrasts it’s worth noting that with the resilient stock market.
Furthermore, in a recent interview, McGlone warned that Bitcoin (BTC) could potentially experience a whole lot of decline and return to its 2019 rally starting point of around $7,000. McGlone cites the drying up of liquidity and growing interest prices as key factors that could lead to a mean reversion for Bitcoin.
Although while acknowledging the capacity for Bitcoin (BTC) to rebound, McGlone points out the digital currency has is still to exhibit strong divergence from other assets and implies that investors should wait for a whole lot of fall in the S&P 500 and copper before seeing as a long position in Bitcoin.
Looking at the facts of Bitcoin, McGlone points out before the substantial liquidity pump in 2020, the cryptocurrency’s average price in 2019 was around $7,000. It following that surged to $60,000 before settling at its current level of $27,000. Although while Bitcoin (BTC) is still currently worth four times its 2019 average price, McGlone cautions that the danger of mean reversion remains and implies that investors should exercise caution in the present market environment.
Bitcoin’s ABC Pattern Could Signal Consolidation And Potential For Upside
Cryptocurrency analyst Michael Van de Poppe has assessed Bitcoin’s recent price action and implies that the ABC pattern could technically be complete for BTC. The C wave went lower than the preliminary A wave, and they are approximately the same length from a price fall perspective. The lowest wick was only $500 off the base case, and the price appears to have entered consolidation just as expected, albeit higher.
Van de Poppe points out C waves having approximately the same length as the A wave is uncommon, and sometimes the C wave can go much deeper than the A wave. Nonetheless, at this stage, it is worth seeing as that the lowest of the C wave could be in. If another fall is lower, it should happen in the 1st half of this week.
If the price breaks over $27,700 or even flips the descending trendline, that may be early signs that consolidation is ending, and BTC’s price is ready for to continue upwards. The ultimate level to turn for higher conviction is $29,000, and RSI is over 50.
On the other hand, if there is a daily candle close below $16,700, another leg down becomes more likely, and Van de Poppe’s target for that would still be $24,000 – $25,3000. Van de Poppe emphasizes that both scenarios are positive tendency over the medium timeframe (months) as long as Bitcoin’s price does not fall and stays under $22,000 in a sustained manner.
Featured image from iStock, chart from TradingView.com