Bitcoin and Ethereum at Risk of Crash in Looming Deflation – Bloomberg Analyst
According to Bloomberg Intelligence's senior macro strategist, Mike McGlone, the bull run for Bitcoin (BTC) and Ethereum (ETH) may soon come to an end as crypto and risk assets face a potential correction.
On Twitter, McGlone shared a visual that compared the ETH/BTC pair, the NASDAQ, and the money supply of the Federal Reserve. The chart indicated that the ETH/BTC pair might be a leading indicator for risk assets. This suggests that there could be a correction in the stock market and potentially in the crypto market as well.
#Nasdaq Rollover vs. S&P 500 and #Ethereum/#Bitcoin – "The main factor depressing aggregate demand was a worldwide contraction in money supplies." This from former #FederalReserve chair Ben Bernanke's "Essays on the Great Depression" may pertain to current markets. pic.twitter.com/h9G5btxAE6
— Mike McGlone (@mikemcglone11) April 14, 2023
The analyst proposes that the markets may be adapting to a period of disinflation that has been caused by the Federal Reserve’s recent reversal in monetary policy. He clarifies that if risk assets peak, markets may be in the early stages of adjusting to disinflation.
Although it is normal in recessions, the Federal Reserve may not ease its policies as freely as it has in the past. Enduring deflation could be a reciprocal outcome. Therefore, according to McGlone, we cannot solely blame $2,000 Ethereum or $30,000 Bitcoin for this scenario.
READ MORE: Altcoins Ready to Steal the Show as Bitcoin’s Dominance Remains Below 50%
During a Yahoo Finance interview, he stated that gold is poised to be a top-performing asset during the deflationary recession he foresees.
McGlone’s optimism about gold is rooted in his observation that many indicators are pointing toward deflationary trends. He thinks that if the stock market turns downwards, this could trigger a surge in gold prices.
Overall, his analysis suggests that the recent bull run in crypto and risk assets may be short-lived. Investors may want to diversify their portfolios to include assets like gold better positioned to perform well during a deflationary recession.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
