Senior macro strategist at Bloomberg Intelligence Mike McGlone has made a gloomy forecast for the bitcoin sector. He thinks that given the rapid decrease in commodity prices and bank deposits, cryptocurrencies may be the next assets to experience losses in a deflationary crisis. Following the pandemic-induced recession, most assets, including cryptocurrencies, saw a year of recovery in 2022, but McGlone cautions that a deflationary bust may be on the horizon.
The researcher claims that Bitcoin may face a big challenge as a result of the country’s first recession. Cryptocurrencies may experience a decline if the general stock market follows the bank’s direction. These tendencies are unsustainable, as seen by a comparison of the KBW Bank Index drop with the S&P 500 and Bitcoin’s growth.
If the bank gauge recovers and indicates that risk assets are picking up again, McGlone contends that there is a chance for a gentle landing. He does, however, issue a warning that things might become worse, much like they did during the previous recession. The bank index fell by nearly 85% during the financial crisis of 2008, although it has now only declined by around 50% from its top in 2022. McGlone does point out that the Federal Reserve is still tightening its policy as of May 2023.
In conclusion, McGlone’s study shows that, despite being the least hazardous cryptocurrency, BTC’s future may not be as promising.
