Amidst the volatility of the cryptocurrency market, Mike McGlone, senior macro strategist at Bloomberg Intelligence, considers the capacity for a whole lot of Bitcoin (BTC) downturn.
McGlone communicates to his Twitter followers, numbering over 57,800, that Bitcoin (BTC) still enjoys a nearly 4x increase since the Federal Reserve began a substantial money supply expansion amidst the COVID market tragedy. Nonetheless, he foresees potential instability for Bitcoin (BTC) in the face of the present financial environment.
Highlighting the drying up of liquidity and escalating prices, McGlone doesn’t discount a possible mean reversion back to the onset point of BTC’s rally around $7,000. If this scenario materialized, it would signify an approximate 75 percent decline from BTC’s price at the time of his commentary, standing at $26,889.
McGlone outlines BTC’s historical tendency of flourishing amid liquidity and faltering when it recedes. He emphasizes his inclination towards the prospect of Bitcoin (BTC) honoring its 52-week down-sloping mean. He further notes the Federal Reserve’s steadfastness in tightening policy twice, regardless of a bank run. This, along with declining copper and cryptocurrency prices, seemingly heed this warning, starkly contrasting to the more resilient stock market.
Within a conversation with Scott Melker, McGlone dismissed the notion of Bitcoin (BTC) serving as a risk-off investment similar to gold under the prevailing financial circumstances. He argues that Bitcoin (BTC) must exhibit a substantial divergence from equities before he considers it a risk-off asset.
He affirms his positive tendency outlook for gold and at a certain point, Bitcoin. Nonetheless, he points to the simultaneous boost and fall of all danger assets in the previous year as problematic. The glimpses of BTC’s divergence strength have been sparse, reports by him. For a conviction in Bitcoin (BTC) as a risk-off investment, he suggests a whole lot of fall in the S&P 500 without Bitcoin (BTC) hitting a new low would be a compelling indicator.
McGlone concludes by underlining BTC’s performance in relation to liquidity infusions. Before the substantial liquidity increase in 2020, Bitcoin (BTC) had an average price of $7,000 in 2019, surging to $60,000. Even at the present level of $27,000, Bitcoin (BTC) is still 4x its pre-liquidity-pump price, suggesting a potential mean reversion risk. He hints that the present market can potentially not be conducive to holding long positions in any danger assets.
Adding to the aforementioned insights, it seems that Mike McGlone exhibits a cautiously optimistic stance toward Bitcoin (BTC) as a store of value. His observations about the capacity mean reversion back to $7,000 and the market’s current circumstances highlight a more prudent and critical approach to BTC’s prospects.
McGlone further elucidates his perspective on the need for Bitcoin (BTC) to demonstrate a whole lot of divergence from equities before being accepted as a risk-off investment. This shows his nuanced understanding of BTC’s market position and his expectation for the digital currency to behave independently of traditional market trends to set up its reliability as a store of value.
Nonetheless, regardless of warning of possible price dips in the short term, McGlone’s comments reveal an underlying faith in BTC’s enduring resilience. By pointing out that BTC’s current price is still 4x its pre-liquidity-pump average, he underscores the digital currency’s impressive growth, even amidst financial turbulence.
This could suggest that McGlone acknowledges BTC’s potential to act as a store of value in the longstanding, albeit with caution about its near-term volatility. His observations on BTC’s market performance can potentially indicate that he sees Bitcoin (BTC) evolving and maturing, potentially moving towards becoming a more established and reliable investment class in the future.
