US Recession Could Drag Bitcoin (BTC) Down Up to 70% – Crypto News – Crypto News
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US Recession Could Drag Bitcoin (BTC) Down Up to 70% – Crypto News

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3 years ago

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Bitcoin (BTC) and the broader cryptocurrency market has had a strong runup since the beginning of 2023 gaining by more than 40% so far. As of press time, Bitcoin (BTC) is trading at a price of $22,789 with a market cap of $439 billion.

Mike McGlone, the senior macro strategist at Bloomberg Intelligence said that cryptos could be facing their first real recession that could lead to lower asset prices and higher volatility.

It was during the last US financial session of 2008 that led to the birth of Bitcoin. While the very premise of Bitcoin’s existence is to serve as an alternative to the fiat system, it still remains a highly volatile asset class. As Bitcoin is likely to test its first major financial recession this year, the question is how much pain is still in the making before resuming the long-term gains.

For this, Mike McGlone compared BTC to the Nasdaq 100 Index since both of them have been in close correlation in the past. Bloomberg Intelligence compares the Nasdaq 100 with its 200-week moving average and its performance over the last two recessions.

Courtesy: Bloomberg Intelligence

During the 2022 market crash, the Nasdaq bottomed at 70% below the mean. Similarly, it was trading at a 40% discount below the mean during the 2009 recession. If the BTC price goes to show a similar resemblance, there is a possibility that it can tank to sub $10,000 levels.

A Bull Case Scenario for Bitcoin

Bitcoin (BTC) has currently been facing psychological resistance at $23,000 levels. On the technical chart, a strong bullish scenario is emerging as the BTC price is on the cusp of a golden cross, This setup occurs when the 50-day moving average crosses the 200-day moving average.

Courtesy: Bloomberg

Sean Farrell, Fundstrat Global Advisors’ digital-asset strategy head said: “Most instances of a golden cross have resulted in favorable returns for Bitcoin, and many have occurred at critical long-term inflection points”.

The recent blowout of US jobs increases the possibility that the Fed could continue to raise interest rates more aggressively going ahead. It will be interesting to see how the BTC price structure forms going ahead.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explores his culinary skills.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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