Bloomberg’s senior commodity strategist, Mike McGlone, has warned of a potential “crypto hangover” in the cryptocurrency market that could persist throughout the fourth quarter of 2023. McGlone’s prediction is based on historical patterns, specifically noting that Bitcoin may need to decline first before indicating a resurgence in liquidity.
In a recent post on Twitter, McGlone explained that declining Bitcoin prices have preceded shifts in Federal fund futures, suggesting a correlation between the two. While the Federal Reserve may not be concerned about Bitcoin’s performance, its status as a 24/7-traded leading indicator could be gaining traction.
McGlone stated, “The bottom line for Bitcoin at the start of 4Q may be that liquidity remains negative, with price implications. Coming of age in a zero-interest-rate world, the crypto hangover could be enduring as global rates continue to rise, despite recession signals.”
Earlier this month, McGlone highlighted the specter of a recession looming over the cryptocurrency market. He suggested that the weakness witnessed in the third quarter could either be a temporary recovery blip or a sign of an impending recession.
Meanwhile, the price of Bitcoin is currently hovering around $27,578, with a 0.42% increase in the last 24 hours. It has also seen gains of 2.88% over the past seven days and a 6.56% increase on its monthly chart.
McGlone concludes that Bitcoin’s recent gains may be a short-covering rally and suggests that $30,000 remains a pivotal resistance level. Despite these gains, he maintains his recession outlook in the United States by the end of the year.
It’s important to note that the content discussed in this article should not be considered investment advice. Investing in cryptocurrencies carries risks, and individuals should exercise caution and do their own research before making any investment decisions.
