Bloomberg Intelligence’s senior macro strategist Mike McGlone warns about the price of Bitcoin (BTC), the largest asset in the cryptocurrency market in terms of market value. McGlone predicts that the price of the crypto king will continue to decline and bring down other risky assets as well.
As a guest on Understanding Macro, McGlone points out that Bitcoin emerged during a period of low interest rates historically, but it now faces a policy environment with rising interest rates. According to the macro analyst, the price of Bitcoin is currently in a downward trend:
What matters is what the 800-pound gorilla is doing. The Federal Reserve (Fed) is still continuing its tightening policy. I think the current downward trend will continue.
As highlighted by McGlone, during periods of high interest rates, risky assets like Bitcoin become less attractive for investors who have access to relatively safer assets such as government bonds that offer higher returns. Typically, the prices of such assets tend to decline.
McGlone concludes that Bitcoin could drop more than 5% from its current level, triggering a flight from other risk assets, stating, “I think there is a risk of falling below $25,000 and taking down all kinds of risky assets with it.”
Meanwhile, Bloomberg Intelligence’s senior macro strategist warns about the short-term outlook for BTC, saying, “The rise in Bitcoin’s price has been extreme. We have seen this in the surge of e-commerce debuts, such as Amazon’s shares. In fact, we have seen it in all other risky assets, and I believe Bitcoin will continue to be a leading indicator.”
At some point, I expect it to revert and trade more like gold and treasury bonds. We had a run-up this year, and the period of losing the gains from that run-up has begun.