Macroeconomic factors pressure Bitcoin’s price in 2024 despite the bullish narratives, says Senior Commodity Strategist at Bloomberg Intelligence, Mike McGlone. This contradicts the narratives that the Bitcoin market is primed for a bull run.
Bitcoin Going Cold Vs Gold
Bitcoin $40,030 currently as at time of writing is likely to underperform the stock market on a risk-adjusted basis in 2024, while gold may come out ahead, says Bloomberg’s Senior Commodity Strategist Mike McGlone.
A January 23 X post from the analyst said:
“#Bitcoin Going Cold vs. #Gold May Define 2024 Market Performance – Most risk assets that went down in 2022 recovered in 2023 and were led by Bitcoin, which may show 2024 leanings if the crypto underperforms gold. Despite new #stockmarket highs, Bitcoin has been trailing the store of value since the 2021 peak. The Bitcoin/gold ratio could be nearing a do-or-die inflection point.”
Too Optimistic A Prospect of Another Bitcoin ATH
Despite the bullish narrative around the recent spot Bitcoin exchange-traded fund (ETF) approval and the upcoming Bitcoin halving, macroeconomic factors may prevent the largest cryptocurrency from reaching new all-time highs in 2024.
In particular, McGlone believes market expectations that the Fed will cut interest rates, which usually has a boosting effect on risk-on assets like Bitcoin, are largely misplaced.
“The Fed will not ease with the ease it has in the past because of inflation it created with easing too much,”
McGlone expects the U.S. economy to finally enter a recession this year, which should drive the stock market down. Bitcoin, as a leading indicator for risk assets, is likely to suffer in such an environment.
“When the stock market and beta goes down Bitcoin goes down more,” McGlone said. His bet on gold is apparent:
“How Sustainable? Gold Rising, Commodities Falling – It’s rare for #gold to go up and broad #commodities to decline, but the 2023 paths may have legs in 2024, particularly if the US follows deteriorating #economic growth in #Europe and #China.”
According to the analyst, gold and long Treasury bonds will likely be the assets that will come out ahead in this environment.