Bitcoin Facing Economic Reset Amid Liquidity Crisis, Says Crypto Analyst

Bloomberg macro strategist Mike McGlone recently shared his insights on the potential repercussions for Bitcoin BTC/USD amid the reversing zero interest rate policies.

What Happened: In a post on X last Thursday, McGlone discussed the cryptocurrency's current standing in the face of evolving economic dynamics.

According to McGlone, the buoyant stock market and the growing probability of U.S. spot exchange-traded funds (ETFs) getting the green light have not prevented Bitcoin from facing a downturn.

The digital asset has seen a 15% decrease in the third quarter leading up to Sept. 6. McGlone interpreted the trend as a possible early sign of an impending liquidity crisis, suggesting that the crypto asset might be signaling a "severe economic reset" due to a sharp decline in liquidity.

Also Read: Bitcoin On The Cusp Of 'Final Correction,' Says Crypto Analyst

Expanding on this, the macro strategist brought up a recent court directive urging the U.S. Securities and Exchange Commission (SEC) to reconsider its position on the approval of a Bitcoin ETF by crypto enterprise Grayscale.

McGlone highlighted that Bitcoin's meteoric rise from a nominal $1 to a staggering $69,000 occurred in a low-interest-rate environment. Therefore, he said, it appears "logical" for Bitcoin to experience a price adjustment in the face of rising interest rates.

Join Benzinga's Future of Crypto in NYC on Nov. 14, 2023 to stay updated on trends like AI, regulations, SEC actions & institutional adoption in the crypto space. Secure early bird discounted tickets now!

McGlone underscored his argument by referring to the federal funds futures, which are projected to reach about 5.45% in November, a significant jump from the 0.6% average noted from 2011 to 2021.This period witnessed Bitcoin's ascent from $1 to an all-time high of nearly $69,000.

The macro strategist warned that the "relative weakness" of Bitcoin might be following the "path of least resistance" as interest rates skyrocket in a short span.

At the time of writing, Bitcoin was trading at $25,848.67, down by almost one percent in the last seven days. 

Now Read: Analyst Who Predicted May 2021 Crypto Crash Now Says Bitcoin Set To Surge To This Price By 2024

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock