Bitcoin at Its Limit? Why This Bloomberg Expert Says This Might Be as Good as It Gets ...0

A Bloomberg commodities expert believes the 2024 bullish market momentum is just "as good as it gets" for risk assets, including Bitcoin. Even as Bitcoin continues its show of strength, extending its price record above $100,000, crypto market participants continue to call for higher prices, suggesting that 2025 might be an even bigger year for the asset and the broader crypto market. However, amid this market euphoria, one prominent analyst has offered a note of caution. Could this be the limit for Bitcoin and the broader crypto market? Gold Strength Offers Warning This might be as good as it gets for risk assets, including Bitcoin, according to Bloomberg Intelligence Senior Commodity Strategist Mike McGlone. McGlone expressed this view in an X post on Thursday, December 19, citing Bloomberg Intelligence's macroeconomic annual performance dashboard. Per the dashboard, Bitcoin has been the strongest performer in 2024, with over 136% year-to-date (YTD) gains. At the bottom are U.S. Treasury bonds with a 4.3% YTD decline. Bloomberg Intelligence While this table seemingly highlights Bitcoin's strong 2024 showing, McGlone contends that there is a warning for risk assets hidden within. As the analyst highlighted, gold is just behind Bitcoin on the table, with a 27.8% YTD performance, more than the 26.1% YTD performance of the S&P 500, with which the leading crypto asset is strongly correlated. McGlone warns that this gold strength, despite the AI boom, may suggest that risk assets may soon be facing headwinds. This is because investors typically flee to gold in search of a safe haven in times of uncertainty. One such headwind that may be looming for risk assets is persistent inflation. Quantitative Tightening Not Over Just Yet Following the Federal Open Market Committee (FOMC) meeting on Wednesday, December 18, Federal Reserve Chair Jerome Powell warned that the central bank's tussle with inflation was not over. In the most recent projections, the central bank sees inflation at 2.5% in 2025, up 0.4% from an initial 2.1% projection in September 2024. As such, the Fed plans to keep interest rates higher for longer, which could maintain the squeeze on much-needed liquidity for risk assets like Bitcoin. Specifically, the Fed now plans to make only two quarter-point rate cuts in 2025 instead of the initial projection of four. The new Fed posture unsurprisingly led to a sell-off across equities and the crypto markets, with Bitcoin dropping as much as 7% from over the $106,500 price point to about $98,800. Still, some analysts remain positive. Bitwise CIO Matt Hougan has contended that the crypto market now has internal momentum that is likely to have a greater impact than the Fed. According to Hougan, the positives for crypto include the pro-crypto tide in Washington with the incoming Donald Trump administration, institutional adoption, Bitcoin purchases by corporations and governments, and technological breakthroughs.

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