The central banks’ aggressive increase in interest rates to curb the runaway inflation put banks in a difficult position. As a result, it was the banks that raised the red flag in the USA and Europe. However, the financial crisis may have just begun. Bloomberg senior commodities expert Mike McGlone warns that the 2023 financial crisis could be ‘the worst crisis in our lives’. The strategist recommends investment tools such as Bitcoin and gold to avoid the crisis.
“Now it will be worse than the 1929 financial crisis!”
cryptocoin.comAs you follow, many banking giants have recently filed for bankruptcy. This, in turn, exposed risks to the financial system and led to mass layoffs in the tech industry. However, the crisis may not be over yet. Bloomberg’s senior commodities expert Mike McGlone warns that the impending financial crisis could be “the worst crisis in our lives”, rivaling the Great Depression that began in 1929.
McGlone says the current situation in global markets is very similar to what it was before the decade-long recession of 1929-1939. However, he also points out that the situation is at risk of getting worse. According to the strategist, a recession is almost certain to begin at some point in the near future, and ‘permanent deflation’ is perhaps a greater risk than inflation right now. Because McGlone thinks this financial crisis shows signs of mirroring the 1929 crash in scale. In this context, the strategist makes the following statement:
I think it will be worse than the 1929 financial crisis. I’m saying it’s very similar to 1929. (…) Everything is the basis for this to get much worse.
Comparison of the current situation with the conditions in 1929
Recent jumps in the stock market, cryptocurrencies like Bitcoin, and copper are “based on this potential thing,” according to Mike McGlone. Everyone was thinking, “Oh, maybe it’s over, a soft landing, everything will be fine, the Fed will start to loosen.” It also assumed that “the probability of the Fed easing until risk assets fall to a new lower plateau is very low”.
Comparing current conditions to those of 1929, McGlone says, “Without higher prices, you almost never make significant adjustments.” Hence, “He always has to stand behind what has happened before,” he records. From this point of view, the strategist shares the following assessment:
When people said, ‘no, the 2020s won’t be like the 1920s again,’ they forgot what the 1920s was after: that big stock market rally? Just before that, there was a major depression. (…) What was the basis of the bear market? Prices went up a lot. Exactly the same thing happened. The ‘bank run’ is clearly happening. We see more deposits coming out of US banks every day. This rate is 2% on a 12-month basis. Something like this has never happened before and our database goes back to 1960. It has always been positive. And there is still congestion.
Bitcoin ‘indestructible’, according to strategist
Mike McGlone also addresses the situation in terms of Bitcoin (BTC), the asset that represents the crypto market. The strategist says that despite regulatory hurdles, the leading crypto is on its way to “becoming a global digital collateral.” Therefore, he predicts that Bitcoin will return to its orbit towards the ATH level of $69,000. However, he also notes that BTC has yet to see the bottom. McGlone explains his views on this matter as follows:
There are bumps in the road, there are issues with the regulations, but something we’ve seen lately is starting to shine through as indestructible. Trade never stops. (…) The last crisis was indeed its birth. Now that defines it.
As a result, according to the strategist, Bitcoin will continue to outperform most risky assets, including cryptocurrencies. McGlone believes that cryptocurrency will eventually trade like gold and treasury bills. But he also underlines that there is still a lot of speculation in the crypto space that needs to be cleaned up.
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