Bloomberg Strategist Says Biggest Liquidity Drop Ever Pushes US into Recession and Bitcoin into Correction

Mike McGlone, senior macro strategist at Bloomberg Intelligence, says a liquidity squeeze will soon push the economy into recession and trigger a Bitcoin (BTC) correction.

In a new interview with crypto influencer Scott Melker, McGlone predicts that the Federal Reserve will remain tightened for at least the remainder of 2023 to curb inflation, and that this will cause risky assets like Bitcoin to crash.

“What we are doing now is the biggest liquidity boost ever, after the biggest liquidity boost ever. And the fact that I can say that and present the data still shocks me.”

McGlone says many economists who had predicted the US would now slip into recession due to the Fed’s aggressive rate hikes have pushed their timetables back to the end of the year. He believes that high interest rates will cause bond yields and the stock market to fall.

“I can go back and give you examples from the 1920s when the US created a tremendous amount of liquidity, which it shouldn’t have done. So the money supply is still negative, the producer price index (PPI) is still negative year-on-year and the Fed continues to hike rates. Everything else will fall into place, and the Fed won’t stop…

I fully expect bond yields to fall after the stock market has done so, and the question is: what’s stopping that? When we called this morning, even our chief economist said, “Yes, they were early, it was a bit wrong, but they still maintain their view of a year-end recession.”

So let’s imagine December. The recession is just around the corner. People are hoping that the Fed will ease monetary policy and will probably say, “No, we don’t because inflation is still high.” That’s something we haven’t seen in a long time.”

The analyst predicts that Bitcoin will collapse later this year as liquidity dwindles.

“What should early signs of this be? [recessionary times]? What has been the biggest indicator of the liquidity pump and new technology over the last 10 years? cryptos. The best clue should be bitcoin and that’s where I look for the bitcoin bleed cause and it still kind of shows what I expected. It’s gone up to nearly $30,000 and just hasn’t managed to get much past that.”

Bitcoin is trading at $29,656 at the time of writing, up 1.0% over the past 24 hours.

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