Mike McGlone

Bitcoin ‘faces headwinds’ as US money supply drops most since 1950s

Research from Bloomberg Intelligence argues that liquidity conditions still do not favor a continuation of the Bitcoin rally.

Bitcoin (BTC) and crypto may yet see a long-term correction thanks to central banks keeping liquidity tight, Bloomberg warned.

In its latest research, Bloomberg Intelligence revealed a cool stance on the ongoing 2023 crypto market rally.

Bloomberg: Expecting BTC price to hold “may be illogical”

Despite gaining 70% in Q1, Bitcoin is not convincing everyone that it will continue to climb or even maintain current levels near $30,000.

Examining the macroeconomic climate, Bloomberg Intelligence became the latest voice to note the close relationship between crypto performance and global central bank liquidity levels.

As inflation bites, banks have been withdrawing liquidity from the economy, with risk assets declining as a result — including crypto. The United States Federal Reserve’s quantitative tightening (QT), which began in late 2021, coincided with the current all-time high for Bitcoin.

Despite the recent banking crisis, Bloomberg noted that plunging M2 money supply and bank deposits mean that liquidity continues to be squeezed.

“Risk assets typically rise and fall on the back of liquidity and plunging US money supply, and bank deposits indicate headwinds for cryptos,” it stated in an analysis uploaded to Twitter by Bloomberg Intelligence senior macro strategist Mike McGlone.

“It may be illogical to expect that stock market, crude oil, copper and the Bloomberg Galaxy Crypto Index (BGCI) to sustain recent bounces with year-over-year measures of money supply and commercial bank deposits falling around 2% — the most in our database since 1959.”

The misgivings come as Bitcoin faces a battle to flip historical resistance back to support, with bulls as yet unable to effect major change.

When it comes to liquidity, meanwhile, others have already noted that crypto now responds to the actions of central banks other than the Fed, and both China and Japan have enacted liquidity injections this year.

“A top question at the start of April is what stops the contracting liquidity?” Bloomberg, meanwhile, continued.

“Most central banks still tightening may portend a lower plateau for the BGCI. Our take is Bitcoin faces headwinds but will eventually transition to trade more like gold and Treasury bonds.”

U.S. dollars gives Bitcoin heat

BTC/USD traded around $28,100 at the time of writing on April 6, according to data from Cointelegraph Markets Pro and TradingView.

Related: Latest Bitcoin price data suggests double top above $200K in 2025

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

In a potential short-term tailwind for risk assets, the U.S. Dollar Index (DXY) saw fresh losses, abandoning a modest comeback to drop back below 102.

Analyzing the situation, popular Crypto Twitter account Cold Blooded Shiller remained tentatively optimistic about the outcome of BTC’s price.

Analyst Justin Bennett nonetheless flagged a distinct range still intact for the DXY, predicting a rebound to come.

“All the ‘dollar is dead’ chants are about to be silenced by what is still the global reserve,” he warned.

U.S. dollar index (DXY) annotated chart. Source: Justin Bennett/Twitter

Related: Crypto winter can take a toll on hodlers’ mental health

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin ‘untouchable’ amid regulatory pressures, says analyst

Bitcoin is “untouchable” because it’s more decentralized than other cryptocurrencies in the space, such as Ether, according to senior commodity strategist Mike McGlone.

Bitcoin (BTC) is “untouchable” despite ongoing regulatory pressures in the crypto sector, and those who don’t have some crypto exposure are “seriously silly” according to Bloomberg senior commodity strategist Mike McGlone. 

During an April 3 stream with crypto podcaster Scott Melker, McGlone argued that unlike other cryptocurrencies such as Ether (ETH), Bitcoin couldn’t be killed by regulators because it’s more decentralized.

“There’s so much disdain about regulators pushing back on the whole space, and that’s the key thing where Bitcoin sticks out,” McGlone said.

“You can’t do anything to this, and you can’t kill it and it’s just unprecedented; it is untouchable.”

“You could make a case that Ethereum is a security when you hear about all these upgrades and people doing this and people doing that to make it better, I’m like okay, well that’s kind of scary, can’t do that to Bitcoin, it’s why it’s fine and impressive,” McGlone added.

The crypto sector has faced a wave of crackdowns in the United States recently, with the U.S. Securities and Exchange Commission filing charges against crypto exchange Kraken for its staking services, then suing stablecoin issuer Paxos over Binance USD (BUSD). The regulator also proposed rule changes targeted at crypto firms operating as custodians.

McGlone stated he is still bullish on BTC but expects the price to go down again in step with other assets if a recession hits.

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

According to McGlone, the April 2 decision by the Organization of the Petroleum Exporting Countries (OPEC) to reduce daily oil output makes a recession more likely, as does interest rate hikes from the Federal Reserve to clamp down on inflation.

“We had our morning call this morning and our economist Anna Wong said, Yeah, their base case is for that recession to kick in Q3,” he said.

“OPEC is helping that. Fed tightening is helping that. So all assets have to go down. That means Bitcoin too. It’s the fastest horse in the race. So I’m overall, certainly relatively bullish.”

Related: Bitcoin likely to outperform all crypto assets following banking crisis, analyst explains

In McGlone’s opinion, it’s “seriously silly” to risk not having some exposure to crypto or trying to stand in its way.

“The key thing I look at simplistically for Bitcoin is, if you’re a money manager, why take the risk of not having some of this revolutionary asset, particularly because it’s so controversial you want to have at least some in it because you don’t want to look like an idiot over history,” he said.

“The smart guys get it; we’re not gonna be a Blockbuster or Sears, and we’re going to be part of this technology.”

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

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.”

Bitcoin’s discount to hash rate highest since early 2020 — Mike McGlone

The senior commodity strategist is bullish on Bitcoin, revealing on Oct. 18 that its relative discount to hash rate has hit levels not seen since the first quarter of 2020.

Bloomberg Intelligence senior commodity strategist Mike McGlone says Bitcoin’s (BTC) relative discount to its high hash rate in October — the largest since the first quarter of 2020 — could soon see Bitcoin return to “its propensity to outperform most assets.”

In an Oct. 19 Twitter post, the Bloomberg analyst suggested that Bitcoin’s ever-increasing hash rate — a measure of the processing power and security of a blockchain — relative to its price points “to risk/reward leaning favorably.”

Many believe that in theory, Bitcoin’s hash rate should go up relative to its price.

McGlone pointed to a graph noting that the 10-day average of Bitcoin’s hash rate in October is “roughly equivalent” to the level it should be at around $70,000. However, the price is instead currently at $19,500 as of Oct. 18.

McGlone noted that such a large gulf between the price and the hash rate was last seen during the “1Q 2020 swoon” — a dip that preceded a meteoric climb that lasted through 2020 and 2021.

McGlone tipped that it was possible we are now seeing a “similar price foundation forming now.”

Graph of Bitcoin hash rate and price. Source: Bloomberg Intelligence

The Bloomberg analyst, known to be a perma bull, said that the high rash rates, along with rising demand, adoption and regulation means Bitcoin could be entering an “inexorable phase of its migration into the mainstream and at a relatively discounted price.”

In a separate post on Linkedin, McGlone said it “may be a matter of time” before Bitcoin returns to its propensity to outperform most major assets, commenting: 

“Returning to its propensity to outperform most assets may be a matter of time, as mainstream adoption progresses and adaptive changes in US accounting standards give it a lift.”

McGlone also said Bitcoin’s price “should continue to rise over time” given the laws of supply and demand, adding that the cryptocurrency is showing signs of “bottoming” in 4Q 2022. 

Related: Bitcoin likely to transition to a risk-off asset in H2 2022, says Bloomberg analyst

“It’s little surprise that a relatively new asset that had skyrocketed has declined due to the rapid pace of Federal Reserve tightening in 2022, but Bitcoin is showing signs of bottoming and divergent strength in 4Q,” he explained.

Previously, the Bloomberg analyst has suggested that BTC is a “wild card,” which is “ripe” to outperform once traditional stocks finally bottom out, and predicted that BTC had the potential to reach $100K in 2022 as the digital currency completes its transition from a risk-on to a risk-off asset.

‘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.”


Bitcoin is a ‘wild card’ set to outperform —Bloomberg analyst

The commodity strategist has pegged Bitcoin to rebound strongly from the bear market despite headwinds for high-risk assets.

Bloomberg analyst Mike McGlone has labeled Bitcoin (BTC) a “wild card” which is “ripe” to outperform once traditional stocks finally bottom out. 

In a Wednesday post on Linkedin and Twitter, McGlone explained that while the United States Federal Reserve tightening will likely determine the direction of the stock market, Bitcoin remains a “wildcard” that could buck the trend, stating:

“Bitcoin is a wild card that’s more ripe to outperform when stocks bottom, but transitioning to be more like gold and bonds.”

The commodities strategist shared more details in a Wednesday report, which noted that Bitcoin was primed to rebound strongly from the bear market despite a “strong headwind” toward high-risk assets:

“It’s typically a matter of time for the fed funds gauge to flip toward cuts, and when it does, Bitcoin is poised to be a primary beneficiary.”

The report notes that while Bitcoin would follow a similar trend to treasury bonds and gold, Ether (ETH) “may have a higher correlation with stocks.”

The Federal Reserve’s increased quantitative tightening comes amid several major interest rate hikes throughout 2022, with the most recent spike accounting for a 75 basis points increase on July 27.

While it is not known exactly when the Fed’s quantitative tightening will end, some economists predicted the endpoint will begin “at some point in 2023” according to a Bloomberg article published in August. 

Quantitative tightening is a contractionary monetary policy tool that is used by central banks to reduce the level of money supply and liquidity in an economy, which can reduce spending across markets such as stocks. 

Related: Bitcoin likely to transition to a risk-off asset in H2 2022, says Bloomberg analyst

Despite Bloomberg’s bullish take, however, other experts believe that Bitcoin and equity markets have actually become more correlated than before.

Cointelegraph contributor Michaël van de Poppe recently said the correlation between the S&P 500 index and BTC was approaching 100%, while a number of IMF economists claimed to have seen a 10-fold increase in correlation between crypto and equity markets in some regions of the world.

Bloomberg analyst tips bullish BTC recovery in next six months

The price of BTC could be set for a bullish rebound this year, says Bloomberg’s senior commodity strategist Mike McGlon, as the market shows similar signs to the bottom of 2018.

Bloomberg’s senior commodity strategist Mike McGlone is tipping that the price of Bitcoin (BTC) will rebound in the second half (2H) of 2022.

Sharing his thoughts to his 48,100 Twitter followers on Wednesday, McGlone saw positive signs in the data Bloomberg’s Galaxy Crypto Index (BGCI) and the 50-week and 100-week moving averages of BTC’s price. He suggested that the current indicators are showing similar signs to the bottom of the bear market in 2018, which preceded a strong rebound in the first half of 2019:

“With the Bloomberg Galaxy Crypto Index nearing a similar drawdown as the 2018 bottom and Bitcoin’s discount to its 50- and 100-week moving averages similar to past foundations, risk vs. reward is tilting toward responsive investors in 2H.”

The BCGI is designed to measure the performance of the largest crypto assets to ascertain a general view of the market’s overall performance. Moving averages pinpoint the average price of an asset over a specific amount of time, such as 50 or 100 days.

Crypto winter in 2018 was a rough time for BTC, as the price plunged down from the $16,000 region in January to a market bottom of around $3,200 by mid-December, according to data from CoinGecko. Following the carnage, however, BTC went on to pump to around $13,000 by late June.

McGlone predicted in a follow-up post that BTC is either on track for “one of the greatest bull markets in history at a relatively discounted price to start 2H” or that data is showing that the crypto market is starting to fail and scare away investors.

“Our bias is [that] Bitcoin adoption is more likely to continue rising,” he said.

McGlone likened the washout in 1H to the “2000-02’s bursting Internet bubble,” which saw many firms tank but also paved the way for top companies like Amazon and eBay to grow.

Weighing over the analysis, however, is the fact the bearish conditions have been in large part in response to the United States Federal Reserve’s hawkish monetary policy and inflation reel-in attempts via a series of interest rate hikes.

In 2022, BTC and the overall crypto market have suffered from several macro factors such as the Russian invasion of Ukraine, global regulation and unemployment rates. Meanwhile, crypto projects and companies imploding have turned sentiment even more bearish.

Related: Crypto owners banned from working on US Government crypto policies

On June 5, McGlone noted that if the stock market keeps dropping at a “similar velocity as in 1H,” the latest interest 75 basis point rate hike from the Fed in June could be the last one of the year as the government works to avoid a recession. Such an outcome could result in a bounce across asset classes as investors re-enter the market.