Bloomberg Intelligence senior macro strategist Mike McGlone is warning the economy is likely to enter a recession, resulting in a drop in cryptocurrency values.
In a new interview with crypto influencer Scott Melker, McGlone predicts that the stock market, business earnings and crypto are all going to take a hit in a looming economic downturn.
McGlone says Bitcoin (BTC) will not be immune even though the king crypto may be showing signs of performing more like a risk-off asset.
“One thing that I love to mention, the 200-week moving average. Bitcoin’s never spent this much time below it and now it’s bumping up against it. And that’s the difference. That’s what’s changed. That’s maturation. It’s great. We’re going to be talking about this more in the future. It’s also showing signs of divergence strength and becoming more of a, maybe, risk-off asset.”
However, McGlone says Bitcoin’s strong rally since the start of the year is likely unsustainable and that it will continue to show a close price correlation with the S&P 500. At time of writing Bitcoin is worth $23,172.
“But up 40% in the year is dicey versus NASDAQ up 10%. Even this morning Bitcoin since Friday is up a fraction and everything is lower. So that’s a good sign of that [divergence] happening. But if I’m right about this typical recession, earnings drop 25%. That’s very mild. It’s normal. It happens. S&P drops maybe 50% from its all-time high. That’s very normal. Then we’re going to have a problem in all cryptos.”
McGlone also says he believes Ethereum (ETH) will outshine other crypto assets.
“I have to leave you with this. I’m bullish Bitcoin but I fully expect Ethereum is going to continue to outperform.”
Ethereum is worth $1,592 at time of writing.
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