Over the past few months, the likelihood of a recession in the United States economy has increased, coinciding with the Federal Reserve’s efforts to address the challenge of containing inflation.
Amid mounting concerns, Bloomberg’s senior commodity strategist, Mike McGlone, has asserted that all indicators suggest an inevitable recession is on the horizon.
According to McGlone, the economy is ’tilting’ towards a recession, pointing to factors such as the Federal Reserve’s tightening policies, underscored by the interest rate hikes, he said during an interview with Blockworks Macro on May 17.
“We are tilting down towards a severe recession that hasn’t even started, and all the indications are right now. <…> There’s nothing I see on the radar up close that what can stop this downward trajectory at the moment,” he said.
He pointed out that some indicators include potential earnings contraction, stagnant market performance, declining natural gas and copper prices, and historically low unemployment rates.
At the same time, despite expectations of a turnaround once the Federal Reserve implements monetary easing in response to its tight policies, the strategist predicts that such a reversal is unlikely based on historical patterns. Indeed, he projected a challenging future for most investment products, such as cryptocurrencies and equities.
Impact on cryptocurrencies
Moreover, McGlone anticipates a challenging phase for altcoins, foreseeing a substantial correction as the stock market undergoes a downward trajectory.
The strategist also offered insight into Bitcoin (BTC), suggesting it is poised to establish a new bear market bottom amid this period of market turbulence. Interestingly, he anticipates a market downturn that will likely wipe out most cryptocurrencies.
“My base case is [the S&P 500 index] is going to 3,000, Bitcoin’s going to go down, I don’t know how far. It might make a new low. <…> Cryptos will go down real hard. We’re going to purge some of these 24,000 cryptos. Get rid of some. They’re just silly. But Bitcoin, Ethereum will come out ahead,” he added.
McGlone asserts that despite a stock market crash, Bitcoin’s performance is unlikely to surpass that of other assets.
“If we don’t go down the stock market, I don’t fully expect Bitcoin to outperform in that case. So there’s kind of a win-win,” he said.
In the meantime, Bitcoin continues to trade below $27,000 after failing to build momentum above $30,000. By press time, the maiden cryptocurrency was trading at $26,894.