As the cryptocurrency market begins to consolidate its bullish advances since the year’s turn, senior commodity strategist at Bloomberg Mike McGlone has shared his analysis in which he suggests that cryptocurrencies could be “facing their first real recession.”
Specifically, McGlone said that digital assets were going through their first macroeconomic contraction, the last of which earlier gave rise to Bitcoin (BTC), which is why similar turning points could be expected this time around, according to the assessment he posted on Twitter on February 5.
According to him:
“Cryptos may be facing their first real recession, which typically means lower asset prices and higher volatility. The last significant US economic contraction, the financial crisis, led to the birth of Bitcoin, and the possible coming economic reset may mark similar milestones.”
Cryptos vs. stocks
Comparing the historical performance of crypto and the stock market, the commodities expert explained that “a key question is how much price pain will there be before longer-term gains resume,” providing a graphic that demonstrates the Nasdaq 100 at parity with its 200-week moving average (MA) “relatively lofty based on the history of US recessions.”
With this in mind, McGlone went on to highlight that:
“In 2022, the index bottomed at almost 70% below this mean, and about a 40% discount in 2009. We don’t expect the crypto market to be spared if the risk-asset tide continues to recede. In the unlikely scenario of a soft landing, the Bloomberg Galaxy Crypto Index appears poised to resume beating most equity indexes.”
Earlier, Bloomberg’s expert shared his views on the future of crypto, admitting he was not yet bullish on digital assets in the short term, but that the flagship decentralized finance (DeFi) coin could reach six figures in the next couple of years, as Finbold reported on January 31.
Meanwhile, Robert Kiyosaki, author of the best-selling personal finance book “Rich Dad Poor Dad,” warned of a rough landing as “bad news, bankruptcy, unemployment, [and] homelessness” were soaring, but that the good news was that there were “bargains everywhere, gold, silver, Bitcoin priceless.”
For all investors who are considering taking advantage of the low prices during a recession to purchase cryptocurrency, it is worth weighing the risks and benefits, as well as carefully planning investment strategies, with the help of Finbold’s guide.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.