Bitcoin Faces Increased Risk Relative to Stocks: Commodity Strategist Mike McGlone Warns of Challenges

Seasoned commodity strategist Mike McGlone says bitcoin is now riskier relative to shares, whereas he additional warned that financial downturn pressures could maintain silver costs at bay.

Bitcoin Volatility Low, Silver Faces Challenges: McGlone

In a consumer communication dated August 2, 2023, the distinguished Bloomberg Intelligence analyst observed that bitcoin’s 180-day volatility, hovering close to document lows round 46%, continuously heralds a positive flip in value. However, he issued a cautionary observe that the cryptocurrency’s deviation from the Nasdaq 100 beginning late in Q1 may sign extra widespread frailty in danger property, particularly if shares pull again amidst typical second-half market swings, persevering with Fed tightening, and receding fears of a recession.

#Bitcoin 180-day volatility is the bottom ever at about 46% firstly of August, which is usually bullish for costs. My major concern is that divergent Bitcoin value weak point vs. equities because the finish of 1Q could suggest strain on all danger property. pic.twitter.com/IJEd11tRjt

— Mike McGlone (@mikemcglone11) August 2, 2023

McGlone envisions that as mainstream acceptance grows, bitcoin (BTC) will progressively reveal attributes extra akin to gold or Treasuries. Yet within the quick future, he anticipates its lagging returns relative to tech shares might endure if the fairness market falls sufferer to seasonal volatility following a exceptional first-half showing. This could possibly be exacerbated if the Federal Reserve persists with rate of interest will increase and the likelihood of a recession lessens after reaching a excessive level earlier this yr, he defined.

Turning to treasured metals, McGlone posited that solely a recession-driven surge in gold may propel silver previous its cussed $30 resistance degree below present circumstances. With gold discovering stability close to historic peaks round $2,000 an oz and silver oscillating between $23-$25, he asserts that the faltering financial indicators from China and the sharpest inversion within the U.S. yield curve in 4 many years lay the groundwork for silver to regress to its post-2008 common of roughly $20, as a substitute of reaching recent highs.

Highlighting a correlation of 0.80 between gold and silver costs since 1949, McGlone remarked that divergence is uncommon and customarily fleeting. In his estimation, solely a marked gold upswing amidst escalating recession issues appears poised to change the current course of the white metallic.

McGlone: ‘Bitcoin Is Riskier Now vs. the Dow’

Earlier, in March, McGlone had projected a possible bitcoin supercycle was in movement, because it overshadowed gold by practically 10x within the year-to-date figures at that juncture. He anticipated that bitcoin’s volatility would regain its footing and development towards unprecedented ranges, assuming historic patterns remained constant.

In an replace on August 6, McGlone warned bitcoin (BTC) now appears to be like riskier relative to shares than in early 2021 when it first matched the Dow Jones Industrial Average. With crypto volatility triple the blue-chip index’s, versus lower than double in Q1 2021, McGlone sees little diversification incentive supporting bitcoin until it might enhance portfolio returns.

Moreover, the strategist sees the danger of a standard recession-driven inventory retreat not priced into consensus forecasts. This might strain bitcoin, given correlation is close to a historic peak of round 0.3. McGlone believes the Dow 30,000 degree, matched by bitcoin when it breached $30,000 in January 2021, could stay resistance for the cryptocurrency if equities decline.

With McGlone’s insights into the advanced interaction between bitcoin, treasured metals, and world financial elements, what are your ideas on the way forward for these property? Share your ideas and opinions about this topic within the feedback part beneath.