Mike McGlone, senior macro strategist at Bloomberg Intelligence, warned on his personal Twitter account that the American economy falling into recession is the biggest risk for Bitcoin (BTC) and altcoins, which are famous for their high volatility.
Reiterates Recession Warning for Both Cryptocurrencies and Stocks
McGlone underlined that although Bitcoin is the least worrying asset among cryptocurrencies, it is unlikely that the American economy will recover from an economic downturn and enter a recession by the end of the year, and once again warned of recession by addressing investors. The strategist also expects a potential recession to negatively impact stocks, which have recovered significantly recently.
As a result of an impending recession, central banks are expected to turn to injecting more liquidity into the system, often resulting in risky assets surviving and interest rates falling.
![](https://public.bnbstatic.com/image/pgc/202307/30078172457c9f06adabc70fbd74fa26.jpg)
McGlone bases his prediction on the historical relationship between liquidity and risky assets, noting that liquidity was significantly negative at the end of the first half of the year. The strategist thinks this could herald a long-awaited recession, which would cause strong headwinds for both cryptocurrencies and recovering stocks. According to Bloomberg strategist, this prediction is the most important obstacle that can stop the Federal Reserve (Fed), which seems more inclined to continue increasing interest rates.
There May Be a Crash of Bitcoin Up to or Even Exceeding 30 Percent
McGlone also drew parallels between the performance of Bitcoin, conspicuously referred to as “digital gold,” and the performance of physical gold during the great economic crisis of 2008. Noting that gold fell nearly 30 percent from its peak before rising, he noted that the largest cryptocurrency could potentially follow a similar trajectory in the second half of the year.
As of now, Bitcoin is on an upward trajectory despite the possibility of a recession resulting from the New York Federal Reserve's (New York Fed) yield curve being at its highest level since 1982. However, it remains unclear what impact these economic indicators will have on the BTC price. Despite warnings about potential risks, investors, especially those with a high risk tolerance, may be viewing any sharp decline as a potential buying opportunity.