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In recent months, there has been an increasing possibility of an economic downturn in the United States, coinciding with the Federal Reserve's efforts to control inflation.
Amid growing concerns, Mike McGlone, a senior commodity strategist at Bloomberg, has stated that all signs point to an impending recession.
According to McGlone, the economy is moving towards a recession due to factors like the Federal Reserve’s tightening policies, including interest rate hikes. He expressed these views during an interview with Blockworks Macro on May 17.
“We are currently heading towards a severe recession that has yet to begin, and all indications are pointing in that direction. <…> I don’t see anything on the horizon that can halt this downward trajectory at the moment,” he remarked.
McGlone highlighted various indicators, such as potential earnings contraction, stagnant market performance, declining natural gas and copper prices, and historically low unemployment rates.
Additionally, despite expectations of a recovery when the Federal Reserve implements monetary easing in response to its strict policies, the strategist believes that historical patterns suggest such a turnaround is unlikely. He predicts a challenging future for most investment products, including cryptocurrencies and equities.
Impact on cryptocurrencies McGlone also expects a difficult phase for altcoins, foreseeing a significant correction as the stock market experiences a downward trend.
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Regarding Bitcoin (BTC), he suggests that it is likely to reach a new low in the bear market during this period of market volatility. Interestingly, he predicts that the market decline will likely wipe out the majority of cryptocurrencies.
The analyst’s projection is that the S&P 500 index will drop to 3,000, and Bitcoin will also experience a decline, although I am uncertain about the extent
“Cryptos will face a severe downturn. We need to eliminate some of these 24,000 cryptos. They are simply unnecessary. However, Bitcoin and Ethereum will come out ahead,” he added.
McGlone asserts that even in the event of a stock market crash, Bitcoin’s performance is unlikely to surpass that of other assets.
“If the stock market does not decline, I don’t anticipate Bitcoin to outperform. So, it’s a win-win situation,” he stated.