Senior Strategist Warns of Recession's Impact on Bitcoin and Altcoins - COINTURK NEWS
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Senior Strategist Warns of Recession’s Impact on Bitcoin and Altcoins

In Brief

  • Senior strategist Mike McGlone warns of a looming US recession's impact on Bitcoin and altcoins.

  • The anticipated recession might trigger a potential downturn in the stock market, affecting risky assets.

  • Bitcoin could potentially follow a similar trajectory to gold in the 2008 economic crisis, facing a possible 30% decline before rising.
6:36 pm (75 days ago)
July 12, 2023

Bloomberg Intelligence’s senior macro strategist Mike McGlone has warned on his personal Twitter account that the biggest risk for the highly volatile Bitcoin (BTC) and altcoins is a recession in the American economy.

Recession Warning Reiterated for Both Cryptocurrencies and Stocks

 Despite Bitcoin being the least worrying asset among cryptocurrencies, McGlone highlighted the unlikely possibility of the US economy averting an economic downturn and entering a recession by the end of the year.

The strategist also expects a potential recession to negatively impact the recently robustly recovering stocks. The expected consequence of an approaching recession would be central banks injecting more liquidity into the system, typically helping risky assets stay afloat and lowering interest rates.

McGlone bases his forecast on the historical relationship between liquidity and risky assets, drawing attention to the significantly negative liquidity at the end of the first half of the year. He believes this situation might signal an anticipated recession and could cause a strong headwind for both cryptocurrencies and recovering stocks. According to the Bloomberg strategist, this forecast is the most significant obstacle that could stop the Federal Reserve (Fed), which appears to be more inclined to continue raising interest rates.

A 30% or More Crash Could Occur in Bitcoin

Interestingly, McGlone made a parallel between the performance of Bitcoin, referred to as “digital gold,” and the performance of physical gold during the great economic crisis of 2008. Noting that gold had a drop of about 30% from its peak before starting to rise, he suggested that the largest cryptocurrency could potentially follow a similar trajectory in the second half of the year.

As of now, Bitcoin is on an upward trajectory despite the recession probability stemming from the New York Federal Reserve‘s (New York Fed) yield curve being at its highest level since 1982. However, it remains uncertain what impact these economic indicators will have on the BTC price. Despite potential risk warnings, investors, especially those with high risk tolerance, may view any sharp drop as a potential buying opportunity.

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