- Bloomberg analyst Mike McGlone expressed concerns about the potential risks faced by cryptocurrencies.
- According to McGlone, Bitcoin is the least worrisome digital asset during economic contractions.
- The price of Bitcoin, according to CoinMarketCap, was trading at $30,757.
In a recent tweet, Mike McGlone, a Bloomberg analyst, raised concerns about the potential risks faced by cryptocurrencies during periods of economic recession. McGlone highlighted that recessions often lead to struggling risk assets and lower interest rates as central banks inject liquidity into the market. He emphasized that cryptocurrencies, including Bitcoin, are particularly susceptible to these risks.
Notably Negative Liquidity vs. Bouncing Bitcoin –Recessions typically portend struggling risk assets and lower interest rates as central banks add liquidity. #Cryptos are tops in risk, with #Bitcoin the smallest worry. It's unlikely the US will avoid economic contraction… pic.twitter.com/E2DriAj7Ud— Mike McGlone (@mikemcglone11) July 11, 2023
McGlone noted that during economic contractions, cryptocurrencies emerge as one of the top risk assets. However, he also mentioned that Bitcoin appears to be the least worrisome among the various digital assets. This observation suggests that Bitcoin might be perceived as a more resilient and stable cryptocurrency in turbulent economic conditions.
It is yet unclear how these economic metrics relate to the price of Bitcoin. The most well-known cryptocurrency, Bitcoin, has traditionally shown resiliency in times of economic crises.
According to CoinMarketCap data, BTC was trading at $30,757 at press time. BTC has risen from a low of $24,797 in the last 30 days to a high of $31,460.
Bitcoin, which many people refer to as “digital gold,” is frequently thought of as a viable defense against the volatility of conventional financial markets. The Federal Reserve’s interest rate decisions, along with other factors, have an impact on the direction the cryptocurrency market is headed. Additionally, the market pays close attention to these decisions as well.
Interest rates and the purchase of risky assets are correlated, and this relationship can be seen in both conventional currencies and cryptocurrencies.
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