Bloomberg’s macro strategist says US bonds are sucking liquidity from crypto and risky assets Here’s his outlook

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Mike McGlone, senior macro strategist at Bloomberg Intelligences, said a major factor is making him bearish in the crypto markets.

In a new interview with crypto analyst Scott Melker, McGlone said the high interest rates currently being offered on US Treasury Bills (T-Bills) are sucking liquidity from crypto markets.

Treasury bills are short-term government bonds sold at a discount, with the difference between the purchase price and face value being accrued interest. Four-week to one-year treasury bills have recently been auctioned off with over 5% interest. He also says that an indicator of a liquidity drain is the drop in market capitalization of stablecoins.

I also look at stablecoins. It’s a bit of a melting asset right now. Stablecoins were great when you had zero interest rates and you had negative interest rates in much of the rest of the world. But now that the US government gives you 5%. People should always be reminded when they point out that fiat currencies decrease over time. Yes, they do. But they pay you interest.

Right now you’re getting really good interest and you’re getting contract cash and 5% guaranteed on a treasury bill, a one year note, it’s hard to pass up. And it’s just that mind-boggling sound of money going well, thank you, and it’s also the US government reissuing a lot of the debt that it hasn’t in the past few months.

It’s just a giant sucking sound for liquid assets, risky assets, and which are the riskiest? Crypto. So I see it’s a bear market coming down.

McGlone notes that crypto markets have never faced macro conditions like this before and he thinks investors will turn to high-interest Treasuries and look to reinvest in crypto afterward. that the markets will have fallen and their interest on the Treasury bills will pay off.

The main thing is that there is this sucking noise. This is what crypto has never had before. There has never been a recession, a real recession. The Fed has never tightened the trend to deflate commodities and never had major competition from Treasuries. Now they do.

For me it’s this sound of sucking away from speculative digital assets in a bear market versus something where, Hey, maybe I can lock in for a little while and be the only person to buy everything at a price reduced in a few years.

The total crypto market cap is $1.05 trillion at the time of writing, down 0.12% in the last 24 hours.

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