Michael McGlone, the head of commodities research at Bloomberg, tweeted a chart of Bitcoin and stated that, as is common in the cryptocurrency industry, “it’ll go up because it went up,” suggesting that a significant reversal in the price of BTC may be imminent.
He brought up the negative U.S. money supply and the ongoing increase in T-bill rates when discussing a potential Bitcoin turnaround. The latter continues to be the highest in the previous 20 years. These “may be headwinds,” as McGlone stated in his X (Twitter) post.
He thinks that the uptick in risk assets this year, including Bitcoin, has “buoyed Fed vigilance” and that now that the “liquidity fuel” has been taken away, Bitcoin may “revert towards enduring means.”
Following the pandemic that began in 2020 and the subsequent printing of trillions of dollars, the Federal Reserve has resorted to quantitative tightening by causing its balance to decline. The M2 supply decreased 2.2% in February of current year compared to 2022. The money supply is shrinking at its fastest rate since the 1930s, when the American Great Depression began, claims Reuters. Despite the most recent rate increase in 22 years, according to experts, the Fed may soon begin lowering interest rates.
Bitcoin likened to stock market of 1929
McGlone previously equated the behaviour of the stock market in the 1930s to that of bitcoin in a tweet. He claimed that the stock market, which was approaching its peak in 1929, shares many similarities with bitcoin in that both have “parabolic price moves,” “excessive liquidity and speculation,” and “revolutionary technologies” like the development of the telephone, the automobile, and the new ability to fly.
McGlone claims that the sole distinction is that the Fed started lowering rates in 1929. Currently, since March 2022, the Fed has been tightening the money supply through rising interest rates. A picture posted by McGlone of a Bloomberg story reveals that Bitcoin’s 100-week moving average has flipped lower. The research concludes that “it may be a question of how long risk assets have to go before liquidity gets turned back on.”
According to CoinMarketCap, Bitcoin is currently trading at $26,085 after falling by more than 8% at the conclusion of the previous week. Since then, the top cryptocurrency has been trading in a range around $26,000. The price fell as a result of rumours that Elon Musk’s SpaceX had sold a significant quantity of Bitcoin. Some others also think that this is just another usual BTC price collapse leading up to the coin’s impending halving in May 2019.
