The onset of a recession, according to senior macro specialist Mike McGlone from Bloomberg Intelligence, may be the largest obstacle Bitcoin has encountered since its launch in the late 2010s. The crypto community is worried about how it would affect the market for digital currencies given projections that July will signal the beginning of a decrease in economic activity.
Everyone is concerned about how the markets will react as the US economy enters a recession. A recession may start in July, according to Bloomberg Economics’ model, which raises questions about the future of Bitcoin and other cryptocurrencies. It is yet unclear how the market will respond to these impending developments and how they will affect digital currencies.
According to Mike McGlone, cryptocurrencies may experience difficulties if the stock market is negatively impacted by the Federal Reserve’s tightening and deflation of commodities. Both the Nasdaq 100 and the Bloomberg Galaxy Crypto Index have climbed by about two times since the end of 2017, but McGlone believes they might be vulnerable to the effects of a quantitative tightening of liquidity.
BGCI has increased by more than 50% this year compared to a 20% increase in the stock index. According to McGlone, this might indicate optionality risks, with a soft landing being relatively valued in comparison to the possibility of an extended economic downturn. The federal funds rate is at 5% and is still climbing. According to Bloomberg’s analyst, this may imply that the effects of cutting back on the stimulus are still to come.
