Bitcoin Is Markets' Early Warning Alarm, Says Bloomberg Analyst

Bitcoin BTC/USD might serve as an “early warning alarm” for the rest of the market, according to Bloomberg strategist Mike McGlone.

What Happened: In a recent Crypto Outlook report from Bloomberg Intelligence, McGlone said that Bitcoin could provide a reasonable warning signal for market movements because is more responsive to shifts in liquidity than traditional equities.

“Although all risk assets are impacted by the same relationship, Bitcoin appears to have an edge over equities in terms of responsiveness, as it reacts to subtle shifts in liquidity conditions, with more pronounced moves at significant inflection points.”

The Bloomberg strategist pointed to the liquidity index’s slowdown between April and September 2021, when Bitcoin’s price action similarly plateaued, as a sign of this phenomenon. Over the same period, equities made successive new all-time highs, noted McGlone.

“Bitcoin's early-detection capabilities featured again when the liquidity index topped in September 2021, followed by Bitcoin weeks ahead of the equity benchmarks,” he said.

“Although liquidity conditions have stabilized, momentum (RoC) is still negative, and Bitcoin's underperformance versus equities since June could be sending another warning to risk assets.”

See Also: IS BITCOIN A GOOD INVESTMENT?

Price Action: At press time, BTC was trading at $19,313, up 2.74% over the last 24 hours, but down 3.5% in the last seven days, as per data from Benzinga Pro.