In a recent tweet, Bloomberg’s Chief Commodity Expert, Mike McGlone, discusses a potential big obstacle for Bitcoin (BTC) and other risk assets. McGlone points to negative U.S. money supply and the continuous rise of T-bill rates as potential headwinds for Bitcoin. He believes that the bounce that risk assets have seen this year has “buoyed Fed vigilance” and with the removal of liquidity fuel, Bitcoin may start to revert back to enduring means. Additionally, he compares Bitcoin to the stock market of 1929, highlighting similarities in excessive liquidity and speculation. As Bitcoin faces these potential challenges, investors and crypto enthusiasts will closely monitor the market for any signs of a reversal.
Bitcoin (BTC) May See Another Big Obstacle: Bloomberg’s Mike McGlone
Prominent Bloomberg expert explains potential obstacles for Bitcoin
Bitcoin, the world’s largest cryptocurrency, may face significant challenges in the near future, according to Mike McGlone, a prominent expert at Bloomberg. In a recent analysis, McGlone highlighted several factors that could hinder Bitcoin’s growth and stability. By examining various indicators and drawing comparisons to historical events, he provided valuable insights into the potential obstacles that lie ahead for Bitcoin.
Negative US money supply and rising T-bill rates
One of the key factors that McGlone identified as a potential obstacle for Bitcoin is the negative US money supply and the continuous rise of T-bill rates. He pointed out that the rise in rates remains the highest seen in the past two decades and could act as a headwind for Bitcoin and other risk assets. The bounce that risk assets, including Bitcoin, experienced earlier this year may have been fueled by the increase in liquidity. However, as liquidity fuel is gradually removed, Bitcoin may revert to more sustainable means of growth.
Quantitative tightening by the Federal Reserve
Another concern raised by McGlone is the quantitative tightening carried out by the Federal Reserve. After printing trillions of USD in response to the pandemic in 2020, the Federal Reserve has started shrinking its balance. This has resulted in the M2 supply falling 2.2% in February compared to the previous year, marking the quickest pace of decline since the Great Depression in the 1930s. While there has been speculation about interest rate cuts in the future, the Federal Reserve’s current tightening measures could pose challenges for Bitcoin in the short term.
Comparison of Bitcoin to the stock market of 1929
To further illustrate potential obstacles for Bitcoin, McGlone compared its behavior to that of the stock market in 1929. He noted several similarities, such as parabolic price moves, excessive liquidity, and the emergence of revolutionary technologies. However, one key difference is that in 1929, the Federal Reserve began cutting rates, while in the present, rates have been steadily rising since March 2022. This comparison highlights the importance of considering historical events and their impact on the future of Bitcoin.
Bitcoin’s 100-week moving average
McGlone also highlighted the downward reversal of Bitcoin’s 100-week moving average as a significant indicator to watch. This reversal raises the question of how long risk assets, including Bitcoin, have to go before liquidity is turned back on. Monitoring this moving average can provide insights into Bitcoin’s short-term performance and its ability to overcome potential obstacles.
Current price and recent market movements
Currently priced at $26,085, Bitcoin has experienced recent market movements that are worth noting. A plunge in price occurred at the end of last week, causing speculation about Elon Musk’s SpaceX selling a large amount of Bitcoin. Since then, Bitcoin has been trading sideways near the $26,000 level. These market movements indicate a period of uncertainty and could impact Bitcoin’s near-term performance.
Rumors of Elon Musk’s SpaceX selling Bitcoin
Amid the recent price drop, rumors have circulated about Elon Musk’s SpaceX selling a significant amount of Bitcoin. If these rumors were to be confirmed, it could have an impact on the cryptocurrency’s price and investor sentiment. Monitoring developments related to Elon Musk and his involvement with Bitcoin will be crucial in understanding the potential obstacles that Bitcoin may face.
Upcoming halving in May next year
Another factor to consider is the upcoming halving event, scheduled to occur in May next year. The halving is a predetermined event programmed into the Bitcoin protocol, which reduces the supply of new Bitcoins entering the market. Historically, halving events have had a significant impact on Bitcoin’s price, with previous halvings leading to substantial price increases. The current price plunge may be related to market anticipation of this upcoming event.
Bitcoin’s potential future obstacles
Looking beyond the current predictions, it is essential to consider the potential future obstacles that Bitcoin may encounter. Market trends, regulatory developments, and technological advancements are all factors that can significantly impact Bitcoin’s trajectory. As the cryptocurrency landscape continues to evolve, monitoring these variables will be crucial in understanding and navigating potential obstacles.
In conclusion, Michael McGlone’s analysis highlights several potential obstacles that Bitcoin may face in the coming months. Negative US money supply, rising T-bill rates, quantitative tightening by the Federal Reserve, comparisons to the stock market of 1929, Bitcoin’s 100-week moving average, and recent market movements all contribute to the complex landscape in which Bitcoin operates. By remaining vigilant and closely monitoring these factors, investors and enthusiasts alike can make informed decisions and navigate the potential obstacles that lie ahead.