According to Bloomberg Intelligence’s senior macro strategist Mike McGlone, the second half of 2023 could be bearish for Bitcoin (BTC) and the rest of the crypto markets.
McGlone believes that risk assets, such as stocks and crypto, could get cheap in the coming months as he believes that an economic recession is on the horizon.
“Risk assets can get cheap in recessions,” McGlone said in a recent note. “The cat-and-mouse game between the rallying stock market and watchful central banks could be an obstacle for risk assets. Cryptos are among the riskiest, and the inability of the Bloomberg Galaxy Crypto Index (BGCI) to sustain above its 2018 high in 2023 may be for a good reason: the Fed is still tightening.”
Furthermore, he added that the Bloomberg Economics team is predicting an “ugly” second half for crypto and equities.
“Our graphic shows a rare divergence, with the Nasdaq 100 Stock Index breaking higher and the BGCI falling in (Q2),” McGlone said.
“Federal funds futures in one year (FF13) are a liquidity gauge, adding rising rate-hike expectations to a climbing stock market may put a ceiling on crypto prices. The BGCI has rallied in 2023 by about 50% to June 1 and the Nasdaq 30%, which may shift the bias toward what’s typical in recessions: risk assets can get cheap.”
McGlone’s comments come as the crypto markets have been on a downward trend since the beginning of the year. Bitcoin, for example, is down more than 70% from its all-time high of $68,789, which it reached in November 2021.
