Bloomberg Intelligence Analyst Cites Reason For Recent Crypto Price Drop
In a recent analysis of digital assets, Mike McGlone, a senior strategist at Bloomberg Intelligence, identified the primary catalyst for the decline in Bitcoin and other crypto prices. McGlone pointed to the US Federal Reserve’s inflation-fighting strategy, which has taken a hawkish turn, as the main factor that could push down risk assets, including digital currencies.
Crypto Bear Market Far From Over – McGlone
According to the analyst, the bear market for crypto is still ongoing, and investors who adopt a buy-and-hold strategy should consider obtaining protective insurance against potential asset devaluation. The analyst also cautioned that while digital assets have experienced a recent rebound, they remain vulnerable to future price declines.
During his analysis of the recent financial market downturn, McGlone pointed out the Federal Reserve’s determination to raise interest rates, despite the risk of triggering an economic recession. He believes equities and crypto assets have yet to reach their lowest points.
His statement suggests that the cryptocurrency market may experience deeper declines once the Fed implements its next interest rate hike. The Bloomberg analyst emphasizes that the cryptocurrency and stock market are one of the most dynamic forces globally.
Still, the Fed’s tightening of monetary policy amidst a high risk of recession is a significant factor driving the decline. Meanwhile, the analyst emphasized that the $25K price level is a crucial support level for BTC and highlighted that the performance of crypto prices in March would determine their fate.
According to him, this will depend on the CPI data released during this period, indicating how the recession affects consumers and the impact of the Fed’s tightening policy on inflation.
A Low Or High CPI Data
A low CPI reading would likely lead to an improvement in market sentiment and a surge in crypto and stock prices. Conversely, if the CPI is high, investor sentiment would likely plummet further, causing a significant price decline across the cryptocurrency and stock markets.
According to McGlone’s analysis, the recent lows in Bitcoin and other cryptocurrencies recorded in 2022 may not represent their lowest points. With the Fed planning to further tighten its policies in March, there may be even greater risks ahead.
McGlone’s report also points out that the markets may be overlooking the delayed impacts of monetary policy, which is a compelling reason to adopt a more defensive stance. In addition, McGlone pointed out that the federal interest rate was at zero just a year ago and has now increased.
He emphasized that riskier assets such as Bitcoin must demonstrate resilience in early March as the federal interest rate approaches 5%. Given that Bitcoin failed to maintain its crucial support level of $25,000 at the beginning of March, it is highly likely that increased interest rates will continue to exert downward pressure on its value, McGlone said.
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