Bitcoin (BTC) has made a remarkable recovery, surpassing the $27,000 level again. This has led to increased speculation that BTC is positioned to make significant gains in the coming weeks.
The worst for Bitcoin is not over yet!
However, despite BTC’s overall strong recovery in 2023, Bloomberg senior commodity strategist Mike McGlone says the worst is yet to come for Bitcoin. The strategist argues that several factors suggest a bumpy path for the digital asset.
He suggests that bitcoin and cryptocurrencies find themselves at a critical juncture as they face the first US recession in their history, a potential stock bear market, and growing scrutiny from central banks. In this context, McGlone makes the following statement:
Cryptos are facing the first US recession, a potential stock bear market, vigilant central banks and high interest rate competition, and they took a leap in 2023. Which suggests that the consensus thinks the worst is over. However, we do not agree with this.
McGlone argues that the massive liquidity injection in recent years, culminating in Bitcoin’s peak in 2021, exemplifies the speculative excesses that characterize the crypto market. To him, these extremes are an indicator of ongoing risks. In addition, McGlone talks about deflationary signals such as falling commodity prices, falling PPI and decreasing bank deposits. The strategist notes that these are harbingers of the potential impact of the Federal Reserve’s tightening measures.
Is there a prolonged recession on the horizon?
In a recent analysis by TechnicalRoundup, he discussed the current state of BTC. The analyst says the close of the month reveals little or no significant change in the market structure. According to the analyst, the market seems to be stuck in the $20,000 to $35,000 range. Also, there are no signs of a breakout in the near term.
A visible “bullish and close above” argument that could indicate an impending change is not currently available on timeframes. The analyst predicts that there will be no significant recovery until the market breaks out of this range. Furthermore, the analyst voices concerns that the market will enter a new range with continuous monthly candles, potentially leading to a long period of recession. This recession, called “multi-month diddling”, could result in significant losses for traders who are not cautious.
Surfing the ‘wavy’ market!
Although the cryptocurrency market has historically been volatile, the current situation is described as particularly “volatile.” Even higher timeframes such as weekly and monthly are not affected by this fluctuating trend. This makes it difficult to establish a directional bias. So the prevailing theme is like a lack of follow-up on the bearish side. However, this did not do much to reinvigorate the bull traders.
The current market situation requires a careful approach when trading. The $27.5K level for BTC stands as a critical line in the sand. According to the analyst, a close below this could signal a bearish bias, further complicating the already complex market scenario. However, the daily time frame remains important in these volatile market conditions. This is where most of the work will need to be done, especially as volatility drops further.
Bitcoin regained $27,000
As you follow on Kriptokoin.com, Bitcoin has again crossed the $27,000 threshold with the effect of employment data from the USA. Especially in May, the unemployment rate in the USA exceeded expectations and reached 3.7%, while it was predicted as 3.5%. The labor force participation rate did not change. However, this marks the highest unemployment rate seen since October 2022. On the other hand, the great American economy showed its strength by creating 339,000 jobs in May. According to analysts, Bitcoin is looking to retest key channels that will lead to $28,000. Market participants see $28,000 as a critical support level to reclaim $30,000.
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