Known for his accurate predictions, Mike McGlone says that the coming months will be positive for Bitcoin and the cryptocurrency market. The senior Bloomberg analyst believes the first half is all about cleaning up the excesses in the crypto market.
According to Mike McGlone, good days are waiting for the Bitcoin and crypto money market
Leading Bloomberg commodity strategist Mike McGlone shared his mid-year overview of the crypto market in a series of tweets. First of all, the analyst compares the current state of the cryptocurrency market with the stock market situation of 2000-2002. At that time, the dot-com bubble formed in the market as a result of the massive spread of internet technologies.
But after the clean-up and “deflation” of the market, this segment of the market, which got rid of the weakest participants, became able to assume a more fundamental role and take root in the financial system. In McGlone’s view, what we’re seeing in the first half of the year is something free of excesses. In a tweet he shared today, the analyst says:
A common theme in cryptos is to embrace the bear and create a better financial system with an institutional and long-term focus, especially similar to the bursting internet bubble of 2000-02. Cleaning up the excess was the case for all risk assets in the first half.
Midyear Outlook: #CryptoAssets – A common theme in cryptos is to embrace the bear and build a better financial system, notably from the institutional and longer-term focused, akin to 2000-02's bursting internet bubble. Purging the excesses was the state of all risk assets in 1H pic.twitter.com/Jm785sHnmP
— Mike McGlone (@mikemcglone11) July 6, 2022
To provide a broader view, the analyst shared a chart of the Wilshire5000 ratio against US GDP. He compared it to the total crypto market capitalization curve. Popularized by Warren Buffett, this chart shows what levels valuations are at at a given moment. Thus, we see that the current situation of all financial markets is very similar to the crises of the early and late 2000s. By examining the analyst’s chart, investors can see that we have just reached crisis points.
Sensible investors have the right to be optimistic
cryptocoin.com As you follow, McGlone says that careful investors will win in the near future. The analyst states that there will be good positions in terms of reward/risk in the second half of the year. McGlone also bases his optimistic assumptions on the 2018 50 and 100 weekly moving averages of the Bloomberg Crypto Index. At the same time, he says the BTC discount is similar to past fundamentals.
This index “predicts” Bitcoin’s price movements, here’s why
On the other hand, the DXY index shows the growth of the USD against a foreign currency. Therefore, it is one of the main tools for determining the true “strength” of the US Dollar. As expected, DXY’s growth often pulls other assets down. Because it makes more sense to support a currency that stops losing its value and offers a stable income with bonds.
According to the correlation chart provided by IntoTheBlock, Bitcoin has an extremely strong negative correlation with DXY, so as the asset grows, Bitcoin and other risky assets fall.
Anyone have good correlation data/charts on $BTC vs $DXY? https://t.co/UsQnCxnxSr
— Chris Burniske (@cburniske) July 5, 2022
If we look at the movement of tech stocks, which greatly influences the movement of Bitcoin and also has a negative correlation with the US Dollar index, the correlation again tends to the safe zone.
