Bloomberg Intelligence’s senior macro strategist Mike McGlone is issuing a warning on the value of Bitcoin (BTC).
In a new Understanding Macro interview, McGlone says that Bitcoin is now facing a monetary policy environment of rising interest rates after coming of age in an era of historically low-interest rates.
According to the macro analyst, the price of Bitcoin is now in the “process of reverting.”
“The key thing is 800-pound gorilla… the Federal Reserve is still tightening. So I think this process of reversion is in place.”
When interest rates are high, risk assets such as Bitcoin typically tend to fall in price as they become less attractive to investors who now have relatively safer assets offering enhanced returns such as government paper to put their money into.
McGlone says that consequently Bitcoin could drop by over 5% from the current level and trigger a flight from other risk assets.
“I think it’s at risk of dropping below $25,000 and taking everything risk with it.”
On Bitcoin’s future, the Bloomberg Intelligence analyst says,
“The pump in the price [of Bitcoin] was excessive. And we’ve seen that in Amazon [online retailer’s stock]. We’ve seen that in all risk assets and I think it’s still going to be the leading indicator.
At some point, I think it’s going to turn around and trade more like gold and treasury bonds… we’ve had a bounce this year and it’s starting to roll back over.”
Bitcoin is trading for $26,778 at time of writing.
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