Interest rate hikes

BTC forming bottom akin to 2018 with one key difference: Bloomberg analyst

Bloomberg analyst Mike McGlone says Bitcoin is forming a bottom similar to how it looked prior to the 2019 bull run — but with one big difference.

Mike McGlone, Bloomberg’s senior commodity strategist, believes Bitcoin (BTC) could be developing a  “bottom” in the same way it did prior to 2019’s bull run but said there is a major difference this time around.

During a Jan. 16 interview with crypto podcaster Scott Melker, McGlone argued unlike in 2018 when financial institutions such as the Federal Reserve were easing interest rates, this time they’re still tightening, along with “every central bank.”

“Back then the Fed already started easing and we held the bottom and broke out higher and then we had that issue in 2019,” he said.

“Right now they’re tightening aggressively, so you look at that and you can’t be too excited about any markets. Give it some time. Big picture, yes, really bullish Bitcoin,” McGlone added.

Graph showing Bitcoin market prices. Image: Mike McGlone

McGlone also warned BTC might not see the surge being predicted just yet, as there are challenging macroeconomic conditions and pressure from interest-rate hikes. 

He believes the Nasdaq is likely to dip below its 200-week moving average, which he claims is another indication BTC’s price rally may not happen soon.

“Liquidity is being pulled away still and if the Nasdaq breaks down, everything breaks down, Bitcoin is going to be part of it.”

“I still think it’s going to come out ahead so to me that’s where we stand,” he added.

Related: Arthur Hayes: Bitcoin bottomed as ‘everyone who could go bankrupt has gone bankrupt’

McGlone also said the market has entered an “unprecedented” environment, “where we’re having bounces in what we know are bear markets and the Fed just says, sorry we’re taking the punchbowl away, we’re not giving it get back to you.”

“I still think we’re in the midst of the biggest macroeconomic reset of our lifetimes, we just had a 100-year event in terms of the pandemic, we’re having a historic war in Europe and we’re having a historic shift in political leadership in China,” he added.

“I mean it’s going back to the days of the Soviet Union when you have one leader and are expecting to be economically viable.”

‘Fed sledgehammer’ will further batter BTC, ETH prices — Bloomberg analyst

With the Merge resulting in a “buy the rumor, sell the news event,” Mike McGlone thinks that ETH might drop to “$1,000, or even get a bit lower” given how hawkish the Fed has been.

The United States Federal Reserve’s inflation “sledgehammer” is about to batter the prices of Bitcoin (BTC) and Ether (ETH) down even further, before reaching back to new all-time highs in 2025, according to Bloomberg analyst Mike McGlone.

Ahead of the latest Fed interest rate hike to be announced this week, the market is expecting a minimum of a 75-basis-point increase, however some fear it could be as high as 100 basis points, which would represent the biggest rate hike in 40 years.

Speaking with financial news outlet Kitco News on Saturday, McGlone, senior commodity strategist of Bloomberg Intelligence, suggested that further market carnage is on the cards for BTC, ETH and the broader crypto sector as Fed’s actions will continue to dampen investor sentiment:

“We have to turn over to the macro big picture and what’s been pressuring cryptos this year and that is the Fed sledgehammer.”

The price of BTC has dropped 13.4% over the past seven days to sit at roughly $19,350 at the time of writing, while ETH has plunged a hefty 20.7% within that timeframe to around $1,350.

ETH’s 20% drop in particular has been a cause of discussion, as the price of the asset has tanked since the highly anticipated and long awaited Merge went through on Sept. 15.

With the major network upgrade essentially resulting in a “buy the rumor, sell the news event,” moving forward McGlone thinks that ETH might drop to “$1,000, or even get a bit lower,” given how hawkish the Fed has been and will continue to be this year.

“I’m afraid [The Merge] got too hyped,” said McGlone, adding that ETH’s price decline is “within a significant macroeconomic broad-based bear market for all risk assets.”

During the interview, McGlone even went as far as to predict that the latest rate hike could cause a crash across assets that is worse than the 2008 housing bubble meltdown:

“I think it’s going to be worse than the 2008 correction, worse than the Great Financial Crisis.”

“The Fed started easing in 2007, and then they added massive liquidity. They cannot do that anymore,” he added.

There is of course a pinch of hopium, however, as McGlone also tipped BTC to strongly rebound and hit a new all time high of $100,000 by 2025, while he is very bullish on ETH long-term due to future potential for institutional adoption.

Related: The market isn’t surging anytime soon — so get used to dark times

Looking elsewhere, other analysts and experts have shared a similar amount of short-term pessimism to McGlone. Speaking to the New York Times on Monday, Kristina Hooper, the chief global market strategist at Invesco, noted the latest Fed announcement will be pivotal because of “what it could mean for the direction of the stock market for the rest of the year.”

“The Fed has been the key driver of the stock market this year, and it has been mostly bad,” she said.

While Ark Invest CEO Cathie Wood also added to her warning from last week that the Fed’s continued hikes could instead end up causing deflation, stating in a Sunday tweet that the “Fed is solving supply chain issues by crushing demand and, in my view, unleashing deflation, setting it up for a major pivot.”