Bloomberg analyst Mike McGlone believes that Bitcoin could further decline to $10,000 by the end of the year as it struggles to break through the $30,000 resistance level. He suggests that negative liquidity and rising interest rates may be contributing factors. McGlone also suggests that a recession in the stock market could impact the broader crypto market.
Our analysis of the situation
Many analysts have tried their hand at predicting the wild twists and turns of Bitcoin's journey, and this time, Bloomberg analyst Mike McGlone steps into the ring with a grim outlook. Brace yourselves, fellow crypto enthusiasts, as he suggests that Bitcoin might be cruising towards a further decline, possibly hitting $10,000 before the year comes to a close.
The saga of Bitcoin's battle with the notorious $30,000 resistance level has been no secret, and unfortunately, the odds of a breakthrough seem to be against us, according to McGlone's analysis. Although Bitcoin has seen a remarkable surge this year, rising from around $16,000, he warns that it might just be a "short-covering rally" with stormy weather ahead.
McGlone dives deeper into the analysis, highlighting the negative liquidity trend in the Bitcoin ecosystem as we head into the final quarter. In plain terms, there is more selling pressure than buying pressure looming over the market, which could very well impact Bitcoin's price in the near future.
Adding fuel to the fire, rising interest rates present an additional challenge. Bitcoin's rise to fame occurred in a "zero interest-rate world," where financial freedom seemed abundant. However, as global rates continue to climb, Bitcoin (alongside other cryptocurrencies) may find itself waking up with a hangover and a serious case of the financial blues.
While it seems that everyone is redecorating their inflation bunkers, authorities are taking measures to curb inflation with rising interest rates. Unfortunately, this tightening of the belt could restrict spending and consequently affect the liquidity entering the crypto market.
Furthermore, Bloomberg Intelligence connects the dots between the FED fund futures and Bitcoin's price, projecting that Bitcoin needs to take a further plunge before a liquidity reversal can occur within those funds. Can't you just feel the adrenaline rushing?
As much as the Federal Reserve might be indifferent towards Bitcoin, McGlone acknowledges the possibility of Bitcoin gaining traction as a "24/7-traded, leading indicator." Its importance in the grand scheme of things cannot be ignored.
But wait, there's more! McGlone adds another layer to the crypto puzzle by suggesting that cryptocurrencies could be leaning into a possible recession. He points out the correlation between the crypto and stock markets, implying that an "ebbing tide" in stocks due to a typical drawdown during a recession could have a ripple effect on the crypto market.
The downward trajectory of the Bloomberg Galaxy Crypto Index (BGCI) and Russell 2000 Index (RTY) from their previous lofty heights in 2022 further highlights this ominous outlook. Both these markets remain tepid, waiting for a catalyst that might potentially ignite a furious price surge.
Crypto analyst Nicholas Merten echoes these sentiments, emphasizing the fundamental relationship between both markets. Without a recovery in the stocks of major tech giants like Apple and Microsoft, the crypto market might find itself in a "really big problem."
As the road ahead appears uncertain, it's time for Bitcoin and the broader crypto market to buckle up for a bumpy ride. Will we see further declines or a miraculous turnaround? Only time will reveal the twists and turns awaiting us in the cryptoverse.
Note: This ghostwritten blog post is for illustrative purposes only. Any predictions or assessments presented in this article are not intended as financial advice. Kindly consult with a qualified financial professional for personalized guidance.
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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