Bitcoin, the largest cryptocurrency by market cap is likely going to keep getting battered if the stock market declines according to Bloomberg’s Mike McGlone.
Bitcoin To De-peg From Stock Indexes, Just Not Yet
Referring to an Op-Ed he published earlier last week, McGlone, who is a senior commodity strategist at Bloomberg Intelligence pegs Bitcoin’s recent decline to the recoil of major stock market indexes.
Whereas it is evidently true that Bitcoin is yet to de-peg from the movement of traditional market indexes, McGlone argues that cryptocurrencies could continue taking some heat at least in the near future.
“The biggest headwind to Bitcoin and macroeconomic-sensitive commodities such as crude oil and copper stems from possible stock-market declines.” McGlone tweeted on April 7.
“If stocks don’t fall, the fed will make them”
There is also the worry of an increasingly indecisive FED triggering a further crypto market meltdown. McGlone notes that as the Federal Reserve steps up to fight inflation, investors may have to take some pressure, stating in a recent interview that he “fully expects” the FED to raise the 50 basis point interest rate hike in the future, after raising the said points for the first time since 2018 by 25 basis points on March 16.
Bill Dudley, a senior adviser to Bloomberg Economics has also argued that while it’s hard to know how much the U.S. Federal Reserve will need to do to get inflation under control, “one thing is certain: To be effective, it’ll have to inflict more losses on stock and bond investors than it has so far.”
What Now?
That said, there is still some hope in Bitcoin shaking off Q1s dust as it seems to outperform the Nasdaq 100 in most areas. To McGlone, “the 2022 dip may be done if the history of the stock market since the inception of Bitcoin in 2009 is any indication.” He shares a chart showing the Nasdaq 100 stock index bouncing off from the 100 moving average for the first time since the 2020 swoon, indicating that a shakeout is least expected.
Traditionally, bitcoin trades about 3x the volatility of the Nasdaq 100, a situation that seems unchanged in Q1. To McGlone, this divergent strength could spur Bitcoin towards breaking key resistance around the 50 –week moving average, igniting a bull run if the price stays above $46,300 this year.
As of reporting, Bitcoin is faltering with this week’s losses completely annihilating gains in the past two weeks.
Price has fallen below $40,000, a key support zone, and is currently trading at $39,140.
