Commodity strategist Mike McGlone predicts recession as top catalyst for gold’s rise above $2,000
Certainly gold and silver prices were low last week and gold was about to fall below $1800 an ounce and silver was above $20000 as we were seeing as per the data. The capitalization of the global cryptocurrency market if we see today is $1.08 trillion, which is about 1.57% less than the previous days. To be sure, earlier this week Mike McGlone, senior macro strategist at Bloomberg Intelligence, shared his forecast for commodities and precious metals and equities and assets like bitcoin. Many questions about bitcoin whether the recent rally was a hollow bottom line or a sustainable recovery.
The director and analyst noted that cryptocurrencies have never faced a US recession and tightening from the Federal Reserve and that bitcoin’s 50-week moving average is below 200 weeks, and elaborated that at some point Most risk assets will go down but the Federal Reserve is still in tightening mode and most markets have seen a rally.
“Bitcoin’s 50-week moving average has never dipped below 200 weeks amid the Fed’s tightening stance,” McGlone said, and the cryptocurrency has seen it soar. Further strategists say swift snap-back is specific to the markets and if bitcoin holds above $25000 it will signal different strength than its central bank where competition could take place. With regard to gold he says that if the US economy is in recession Precious metals have a good chance of reaching $2000 per unit if the U.S. collapses, and the strategist wrote that “the greatest potential for economic contraction from the yield curve in nearly 30 years and the Federal Reserve is still tightening and will hold most metals in 2023.” A US recession is certainly a top catalyst that could push the metal above $2000 an ounce. Additionally, he added that according to his data, the bearish potential is visible and after 1992 there is definitely a record in our database. The 3 month to 10 year Treasury curve has the highest downside potential that we can measure. Another reason it may be different this time is that the Federal Reserve’s instincts are familiar to the 2022 inflation market and they also think that unless the Federal Reserve decides to move away from its seven policies,US regulators and Federal Reserve issue joint warning about crypto liquidity risks.
The statement regarding cryptocurrencies was issued jointly by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) on Thursday. The Federal Reserve and the Federal Deposit Insurance Commission and the Office of the Comptroller of the Currency explained that their statement highlights key liquidity risks associated with cryptocurrencies and all brethren in the crypto asset sector that banking organisations must be aware of. He warned that certain sources of funding, particularly from entities related to crypto assets, could create and exacerbate liquidity risks for banking organisations only because of the uncertainty over the timing of the deposit effect and the scale of withdrawals.
For example, the stability of deposits by crypto institutions to benefit their customers may be driven by the behaviour of the end customer or the dynamics of the crypto asset sector, and not just by the entity concerned with the crypto asset, which is a direct and indirect asset of the banking organisation. There is opposition. The regulator was told by them that such deposits may be susceptible to exits with large and rapid inflows when clients react to certain market events and media reports and uncertainty thereof in the end crypto asset sector itself.
Another example of deposits that constitute reserves related to stablecoins that may be “susceptible to large and rapid outflows” include unexpected stablecoin redemptions or the economy and dislocations in crypto asset markets. . The Federal Reserve, the FDIC, and the OCC recommend that crypto entities only be required to actively monitor and establish liquidity risk monitoring and banking organizations that source funds and require banking organizations to Existing risk management principles should be applied to cryptocurrencies where necessary. Banking organizations are neither reflected nor discouraged to provide banking services to any particular class or type of customers as may be permitted by law or regulation. The Federal Reserve and the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency have all issued a warning in January about cryptocurrency risk, and the regulator has explicitly called for fraud, scams, legal uncertainties, false or misleading representations by crypto companies. Significant volatility in the markets, risk aversion and contagion risks were noted.