Earlier this week, macro strategist Mike McGlone warned investors that cryptos, which are outperforming other assets, could plummet if deflation sets in.
In a tweet on Wednesday, McGlone said he remains cautious about crypto assets amid a worsening economic climate.
The strategist wrote that “a deflationary bust may be gaining fuel as seen in plunging commodities and bank deposits.”
He added that crypto assets could face downward risks if the broad stock market falls.
“Bitcoin, born of the 2008 financial crisis, is facing its first U.S. recession, and if the broad stock market follows banks, cryptos are likely to ebb with the tide,” McGlone wrote.
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“The up-and-coming 24/7 traded leading indicators, revolutionary technologies and assets – Bitcoin BTC/USD and Ethereum ETH/USD – may be running into a wall of resistance at the key round number levels of $30,000 and $2,000,” he added.
At the time of writing, Bitcoin was trading at $28,611, three percent down in the last seven days.
Meanwhile, CoinShares chief strategy officer Meltem Demirors said earlier this week that the U.S. banking crisis was the leading cause behind Bitcoin’s price action in recent months.
In an interview with Bloomberg Television, Demirors said there were two catalysts that have given Bitcoin a boost. First, investors are regaining an appetite for risk and, second, they are anticipating next year’s halving event in April when miners’ rewards are cut in half, she said.
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