Bloomberg Strategist: In Aftermath of FTX Collapse, Bitcoin Could Revisit $10K Support
Recently, Mike McGlone, a Senior Commodity Strategist at Bloomberg Intelligence (Bloomberg’s research arm on the Bloomberg Terminal”), shared his thoughts on how the collapse of SBF’s FTX empire could impact Bitcoin price in the next several weeks.
On Tuesday (8 November 2022), Binance CEO Changpeng Zhao (aka “CZ”) and former FTX CEO Samuel Bankman-Fried (aka “SBF”) shook the crypto market with a pair of stunning announcements.
First, SBF announced that FTX and Binance had “come to an agreement on a strategic transaction with Binance” for FTX:
SBF went on to say:
“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologize for that… But the important thing is that customers are protected…
“A *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world…
“I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.“
A few minutes later, CZ took to Twitter to announce that FTX had asked Binance to help it with “a significant liquidity crunch”, and that Binance had decided to protect FTX’s customers by signing a non-binding letter of intent (LOI) to fully acquire FTX:
It is within this context that on Wednesday (9 November 2022), McGlone said:
“The breakdown of Bitcoin and crypto assets may trigger capitulation sell stops in most markets that have been under pressure this year... The great risk-asset reversion of 2022 has become clear as of November 9, but it’s the remaining trading sessions that may set the stage for 2023, with Bitcoin – one of the fastest horses in the race, and top leading indicator – breaching support and risks revisiting $10,000 support...
“The loss of confidence from FTX’s downfall and its leader, Sam Bankman-Fried, is a shock to cryptos, but the macroeconomic dominoes may be more significant.“
On 19 October 2022, McGlone had this to say about Bitcoin:
“It’s little surprise that a relatively new asset that had skyrocketed has declined due to the rapid pace of Federal Reserve tightening in 2022, but Bitcoin is showing signs of bottoming and divergent strength in 4Q. The lowest-ever crypto volatility vs. the Bloomberg Commodity Index may portend better performance for Bitcoin…
“Bitcoin’s ascending leading-indicator status and potential transition toward a risk-off asset like gold and US Treasury long bonds may be playing out in 2H [second half of the year]. Our graphic shows the primary headwind for most risk assets in 2022: aggressive Fed tightening to squash inflation. An indication of divergent strength for the crypto may be that its price of around $19,500 on Oct. 18, with the one-year federal funds future (FF13) signaling rates close to 4.75%, was about the same as it was in June, when FF13 was near 3.5%...
“The fact that the benchmark crypto hasn’t dropped along with the latest round of rate-hike expectations may also signal a Fed end game on the horizon. A top potential catalyst for central banks to curtail tightening is for markets, notably stocks and commodities, to do it for them, which may favor Bitcoin.“
He went on to add:
“Bitcoin’s definable diminishing supply is unprecedented on a global scale, and so prices should continue to rise over time unless something unlikely reverses demand and adoption trends, given the laws of supply and demand.“
He also said:
“Bitcoin may be entering an inexorable phase of its migration into the mainstream, and at a relatively discounted price.“
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