Many analysts have weighed on the potential trajectory of the flagship cryptocurrency, Bitcoin.
Bitcoin Price Could Decline Further
This resistance level has long been touted as the key to a sustained breakout in Bitcoin’s price. However, going by the analysis that McGlone shared, the odds seem to be against this happening.
Bitcoin has risen significantly in 2023, considering that the crypto asset traded at around $16,000 at the beginning of the year. But, McGlone warned that this may be a “short-covering rally.”
As part of this analysis, he noted that liquidity in the Bitcoin ecosystem remained negative heading into the fourth quarter. This ultimately means there is more selling pressure than buying pressure, which could affect Bitcoin price.
Another factor is the rising interest rates. McGlone noted that BTC gained prominence in a “zero interest-rate world” with greater financial freedom. But now, Bitcoin (alongside other cryptocurrencies) might continue to endure a hangover as “global rates continue to rise.”
Global inflation is said to be on the rise, and to curb it, authorities are raising interest rates, which could restrict spending and, by extension, the liquidity that goes into the crypto market.
Meanwhile, the analysis noted Bitcoin’s importance in the grand scheme of things. Bloomberg Intelligence drew a correlation between the FED fund futures and Bitcoin’s price. According to projections, BTC needs to decline further before there can be a liquidity reversal in those funds.
While the Federal Reserve may not care about BTC, he stated that Bitcoin’s “24/7-traded, leading indicator status could be gaining traction.”
The Fate Of The Broader Crypto Market
In another tweet, McGlone noted that cryptocurrencies “might be leaning into recession.” To drive home this point, he highlighted the relation between the crypto and stock market and stated that the latter could succumb to an “ebbing tide” suppose the stock market were to experience a “typical drawdown” due to a recession.
Despite the “broader on-and-of-again fluctuations,” this projection is said to be reflected in the “downward trajectory” of the Bloomberg Galaxy Crypto Index (BGCI) and Russell 2000 Index (RTY) from their all-time highs in 2022. Both markets have remained tepid and continue to consolidate as they anticipate a “catalyst” that could spark a price surge.
This analysis is similar to that of crypto analyst Nicholas Merten, who, while drawing out the direct relation between both markets, noted that if the stocks of big tech companies like Apple and Microsoft don’t start picking up, there could be a “really big problem” for the crypto market.