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McGlone Reiterates Bullish Projection for BTC As 30-Year US Bonds Sustain Below 2%

cryptoknowmics.com 23 August 2021 23:30, UTC

Bloomberg senior commodity strategist Mike McGlone has reiterated his bullish prediction for Bitcoin (BTC) on Twitter yesterday. In a continuation of his previous analysis, McGlone brought in another factor that will likely boost the chances of a bull run in gold and BTC in the second half: 30-year-old US bonds.

McGlone Cites 30-Year US Bonds Persisting Under 2% as Bullish Indicator for BTC

Bitcoin might be struggling to break $50,000 at the moment but McGlone has projected that investors frenzy will drive its prices higher in the second half of 2021. The financial analyst cited 30-year old US bonds to elaborate on his forecast.

In a recent tweet, McGlone proposed that if the rate of return offered by long bonds remains below 2%, it could have “bullish implications” for both Bitcoin and gold.

"Unlike the stock market, the old analog store-of-value and new digital version share substantial corrections," he emphasized.

Notably, McGlone has stated in a previous analysis that both Bitcoin and US Treasury long bonds have had substantial corrections that “favor responsive buyers, rather than encouraging new shorts.”

“We see bullish fundamental underpinnings for Bitcoin and bonds improving, thus favoring the enduring trends. They’re linked. Negative yields in Japan and much of Europe are a downward pull for the U.S and enhance the value of the upcoming digital reserve asset,” McGlone noted in the August edition of Bloomberg Intelligence report.

Impact of Declining Bond Yields on Bitcoin

After a large part of the world began locking down in the face of covid last year, the Federal Reserve deployed emergency measures that changed the bond market. There was a drastic decline in annual yields and institutional investors were left with few options to resist inflationary pressures.

Things became dire when return rates on longer-dated bonds breached below 2%. This was a real game-changer for cryptocurrencies as investors started to look for riskier alternatives.

"It was the breach of [the 2%] threshold in 2020 that preceded the risk-off swoon and laid the foundation for Bitcoin’s move toward new highs this year," the Bloomberg research highlighted.

Now markets are looking forward to Fed chair Jerome Powell’s address at the upcoming Jackson Hole meeting for any hints of tapering of the $120 billion bond-buying policy.

Meanwhile, yields on long bonds have remained below 2%, despite growing anticipation around the event. This could be attributed to lingering uncertainty about the economy amidst rising cases of Delta variant.

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