In a recent Twitter revelation, Chief Commodity Strategist of Bloomberg Intelligence, Mike McGlone, disclosed some crucial insights about Bitcoin that might have a larger impact on the economy.
The stakes are high as Bitcoin hovers around the $30,000 mark, drawing attention due to speculations about a potential ETF launch and the soaring stock market. However, there’s a red flag that can’t be ignored – a Bitcoin stall might signal more significant economic issues.
Bitcoin’s Bounce: A Positive Sign Or A Warning?
As per a screenshot from the Bloomberg report, one pertinent question arises: what would happen to Nasdaq if BTC experiences a substantial fall from the $30,000 level? Undeniably, the impressive 100% bounce from the 2022 low to the current $30,000 on July 19 has been a positive development for BTC.
Yet, for Bitcoin to achieve another 2x advance, it may require a similar foundation – which, in this case, might involve a significant decline.
The graphic displayed in the screenshot illustrates a concerning observation – the risk-asset rally in 2023 has not received recent support from Bitcoin, often considered the fastest horse in the race. While BTC has only climbed approximately 5% since the end of 1Q, the Nasdaq 100 Stock Index has experienced a more substantial surge, nearing 20%.
This discrepancy raises the possibility that BTC might play catch-up or be a warning sign of potential headwinds brought on by a deflationary economic storm. The prevailing bias appears to lean toward the latter.
Interestingly, roughly a month ago, BlackRock’s entry into the Bitcoin ETF application arena triggered a short-covering rally akin to what was witnessed with the advent of futures in 2017 and futures-based ETFs in 2021.
However, the expectations for an ETF launch in 2023 remain uncertain, especially in light of Bloomberg Economics’ prediction that the US might tilt toward recession in the second half of the year.
These revelations from Mike McGlone and the Bloomberg report serve as vital indicators for investors and economists alike, urging them to pay attention to Bitcoin’s movements as a potential harbinger of economic trends. However, the situation is complex, and any significant developments in the Bitcoin market may have far-reaching implications for the overall economy.
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