Bloomberg Analyst on Bitcoin: ‘Headwinds Remain Strong’

McGlone puts a damper on the Bitcoin bull market party.

Bloomberg Senior Macro Strategist Mike McGlone has asserted that Bitcoin remains in a downward trajectory.

The analyst tweeted this view yesterday, citing the 50-week moving average. According to McGlone, the sell-side pressure remains, as the main hurdle that faced the prices of assets in equity markets in 2022, which he taps as market expectations of the Fed to raise rates, remains. He points out that the only difference is that prices are now significantly lower.

Once again, the analyst taps the $25k price point as the level to watch. According to McGlone, the ability or failure of Bitcoin to break the level will likely have implications for all risk assets.

“Headwinds Remain Strong; Markets Have Bounced – ‘Don’t fight the Fed’ was the dominant headwind for markets in 2022 and remains so in 1Q,” McGlone writes, summarizing his notes. “Bitcoin $25,000 resistance may prove significant for all risk assets.”

Headwinds Remain Strong; Markets Have Bounced – “Don't fight the #Fed" was the dominant headwind for markets in 2022, and remains so in 1Q. #Bitcoin $25,000 resistance may prove significant for all risk assets pic.twitter.com/L1OTtI1GHx

— Mike McGlone (@mikemcglone11) February 26, 2023

It is worth noting that the analyst had expressed similar sentiments last week, noting that further decline in the stock market may be necessary for the Fed to flip its hawkish stance. The Fed fund rate currently sits at around 4.75%. However, Fed officials maintain that increasing the rate above 5% is necessary to bring inflation down to desired levels.

Meanwhile, the price charts appear to have confirmed McGlone’s analysis. In a tweet today, pseudonymous seasoned technical analyst Duo Nine, asserting that the weekend bounce is over, said Bitcoin seems to have formed a five-step correction. Duo Nine says the last leg of this correction has already started unless the BTC price breaks above $23.7k. The analyst has set the potential target for this downward push at around $22k.

The bounce is over. #Bitcoin appears to form a 5 step correction.

The last leg starts now, unless it breaks above $23.7k.

You long the support and short resistance. Easy right?

Curious what will happen at $22k. #BTCUSD #BTC pic.twitter.com/RhltEsrVs3

— Duo Nine ⚡ discord.gg/ycc (@DU09BTC) February 27, 2023

It bears mentioning that per Elliot Wave Theory, the impulse wave travels in the direction of the trend and comprises five waves. On the other hand, the corrective wave usually consists of three waves. Adopting the theory here would mean that Bitcoin is still in a bear market, as posited by McGlone, with a three-wave bounce possible following the potential drop to $22k.