Bitcoin poor performance in 3Q could lead stock market to a recession

The senior commodity strategist at Bloomberg Mike McGlone thinks Bitcoin’s (BTC) price action in the third quarter could be a leading indicator of what could happen next to the stock market, after the Nasdaq 100 futures index has overperformed BTC in both July and August.

“Is one of the best-performing assets ever telling us something”, asks McGlone in a recent shared analysis by Bloomberg Intelligence, on September 5.

Is One of the Best-Performing Assets Ever Telling Us Something – #Bitcoin has dropped about 15% in 3Q to Sept. 1 vs. a 2% gain in the Nasdaq 100 Stock Index. Weakness in the benchmark crypto could be a precursor for a normal stock market drawdown in a recession or simply falling… pic.twitter.com/4fiCFD1cl9

— Mike McGlone (@mikemcglone11) September 5, 2023

Notably, after months of relative strength against the Nasdaq 100 index (up 2%), Bitcoin has started showing relative weakness in the last two months, dropping 15% in the third quarter to September 1.

Mike McGlone explains that this is a meaningful divergence, due to Bitcoin being the best-performing asset in history, which could lead to one of two probable outcomes:

  1. The stock market follows BTC poor price action in a recession; or
  2. Bitcoin continues to lose in performance versus Nasdaq 100 in a unique moment for both markets.

According to the analysis, they believe that ‘1’ is the most probable scenario, with Bitcoin leading a general recession that will also affect the stock market. The high interest rates would be to blame, considering that BTC was able to grow in the reality of low interest rates, through its history.

Interestingly, the commodity expert had already shared an analysis on August 21, showing that the Bitcoin price chart resembles the 1930s stock market’s chart, following the major crisis that took place in 1929. Warning for a possible major recession for the leading cryptocurrency.

The Bitcoin halving cycle

Meanwhile, most Bitcoin analysts and enthusiasts are expecting the best-performing asset to repeat the past cycle’s price action regarding the event known as ‘the Bitcoin halving’ when the block subsidy paid to Bitcoin miners through monetary expansion is cut in half, diminishing the supply inflation effects to the digital commodity.

With a circulating supply of around 19.48 million coins, one BTC would be worth close to $66,838, if Bitcoin ever reaches its all-time high market cap. A possible 160% uptrend from current prices of $25,747 by press time.

Besides a majority of positive expectations, there are a few other analysts also warning about a possible change in Bitcoin’s performance within the halving.

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