Commodity Strategist Mike McGlone Says Cryptocurrencies May Be Facing Their First Real Recession
Bloomberg’s research arm Bloomberg Intelligence (BI) released its February 2023 outlook last week, and BI’s Senior Commodity Strategist Mike McGlone tweets on Sunday that the first real recession is coming for the cryptocurrency and it has to face it. Which usually means that the lower the asset’s price and the higher the volatility. Certainly senior strategists say that the last significant US economic contraction and financial crisis led to the birth of bitcoin and perhaps we can say that the economic injury and crisis of many kinds to come is the milestone for the economic situation. and at the same time be able to influence the economy in a significant way. He further adds that you can get a sense of how much pain the price will suffer before the long-term gains resume, and of course, “Our graphic compares the Nasdaq 100 to [Bitcoin’s] 200-week moving average.” Shows the goods again and based on the history of US recessions we can say that it is higher and further than expected. Elaborating that if the downside in risk assets continues then we do not expect crypto to The currency market will settle down as central banks have delayed and certainly avoided taking action, while most risk assets fall into recession or bearish and this could spell trouble for cryptocurrencies which are the biggest risk takers. It goes on to say that of course it could go higher after the cryptocurrency exchange filed bankruptcy but “sees another situation similar to the collapse of Lehman Brothers where the trough came much lower after about 6 months.”
Reports in this regard continue and state that the Federal Reserve tightening may remain the primary for most risk assets and crypto assets in particular, despite the risk of recession. Subject to increased volatility in markets, buy-and-hold strategies can be profitable at the cost of greater speculation and leverage. Certainly the pandemic was a major disruption that could shape markets for years and it sparked the largest sovereign fund and monetary pump in its history and is still in process as the report noted. “Risk assets usually come down well after the first easing from the Federal Reserve and remain so well into early February.”.
