Mike McGlone, senior macro strategist at Bloomberg Intelligence, shared a remarkable warning about the value of Bitcoin (BTC).
According to McGlone’s analysis, the growth and appreciation of Bitcoin (BTC) occurred during periods of low interest rates and expansionary monetary policies. During these periods, while the returns on traditional financial assets remained low, investors began to turn to alternative assets. During this period, Bitcoin was seen as digital gold and was preferred by investors. However, recently, we have been in a period when central banks tend to increase interest rates. This may worry investors who consider Bitcoin (BTC) a risky asset.
According to the macro analyst, Bitcoin price is currently “in the process of rebounding.”
“What is important is the strong institution that directs the market… The US Fed is still implementing a tightening policy. Therefore, I think this return process exists.”
High interest rates can increase returns on traditional financial assets, which can reduce investors’ demand for alternative assets, especially risky assets. Risky assets like Bitcoin may become less attractive against higher interest rates. This could cause the price of Bitcoin to drop.
As a result, Bitcoin (BTC) could fall over 5% from its current level, triggering a flight from other risky assets, McGlone says.
“I think there is a risk of falling below $25,000 and risking everything with that.”
Bloomberg Intelligence analyst says the following about the future of Bitcoin (BTC):
“[Bitcoin] The increase in price was excessive. (…) We have seen this in all risky assets and I think it will still be a leading indicator. I think at some point this will reverse, it will be traded more like gold and treasury bonds. “We had a recovery this year and the comeback is starting.”
Bitcoin is trading at $26,575 at press time.
You can follow the current price movement here.