 The FTX crisis has shocked the crypto industry and sent markets into turmoil. But what if this is just the surface? What if the FTX debacle is going to spark a larger crisis in crypto and perhaps even beyond? To understand the broader impacts of these latest events, we sat down with Mike McGlone, senior commodity strategist at Bloomberg Intelligence. Before we get started, as always, don't forget to like the video and subscribe to our channel. I'm Giovanni, let's get started. The situation is evolving very rapidly. So what are your impressions and these scenarios that you are considering at the moment? The bottom line for me is this a major shock to the entire crypto system with domino effects to everything that Sam Bankman freed might come out as potentially somewhat of a fraud. He was the savior in the space. He was considered JP Morgan of the space who helped save the financial crisis in the early 1900s. And just the fact that FTX is going under and what it turns out to be he wasn't. I mean, I recall seeing him at the salt conference earlier in the year in the Bahamas and he was him on stage with Bill Clinton, Tony Blair, and it was quite significant. But that person, who I still respect, but that is the shock to the system. So Bitcoin breaking down to a new low in the year and blow 20,000 has potential to be a catalyst for everything to break down. And that's what's happened when it first hit the tape on Tuesday. Crude oil wasn't the first things that broken down and since dropped another 5% as time we're taping this on Wednesday the 9th. The stock market starting to break down. It's just the markets at that point in the year. Everybody who's bought dips all year have basically lost money and all assets. The Fed's tightening more aggressively. Ever since Rebank on the planet is tightening into recession and people have tight trigger fingers and stops. So to me this is a trigger that stops for everything. Yeah, definitely. It was the last of a number of shocks that we witnessed this year. We weren't expecting San Bank of Freedom. It seemed to be like the wide night of the crypto industry saving trying to save a lot of those troubled firms. And at the end, falling victim of this dynamics himself. Where do you see Bitcoin and Ethereum going from here in the next few weeks and months, let's say? Down. Right now, down. Something unusual has got to save it. I'm afraid Bitcoin might head to the 10 to 12,000 area. I don't see it getting above 20,000 to show anything other than more lower. It's got to sustain above that 19 to 20,000 level. And I fully expect it'll be responsive selling when we get near there. This is a major shock and you got to respect that shock. The bigger picture is at some point, I think it's going to break out, but that's going to evolve getting the central banks with Fed off that pounding sledgehammer. And parents like that still early days. So what we have here in Giovanni is 1929-ish. We have the world tilting towards recession. Clearly in Europe, our recession model for my Bloomberg economics team, our chief economist, Anna Wong, for U.S. recession next year is 100%. My colleague in Hong Kong shows China's property crisis has to drop another 25%. This is the dominoes and the number one leading most fluid 24-7 trading vehicle on the planet, Bitcoin, has broken down. From a consolidation period, I look at that as a technician, as a fundamental guy, just look for rallies to sell. I don't know what saves this. In the big picture, this is the breakdown of all risk assets. So next year, I think by the time we're speaking, this time we'll be talking about an enduring deflationary recession, maybe a recovery in Bitcoin. Potentially Ethereum doing okay. Ethereum's still been very impressive. It's holding above 1,000. It's been outperforming Bitcoin all year. It's gone through the proof of transition to proof of work at a great time. When we have this energy crisis and it's revolutionizing FinTech and financial markets, but that global digital collateral Bitcoin is under pressure and will remain. It's been one of the key leading indicators. So I fully expect, like I said, 20,000 good resistance, 10,000 to 12,000 good support for an extended period. You said that basically the loss of confidence from FTX downfall is a shock for crypto, but the macroeconomic dominoes could be more significant. So when you talk about these macroeconomic dominoes, what do you mean exactly? And are we talking about some risk of contagion? Because that's what a lot of people are talking about. Yes, it's a catalyst for people to hit stops in positions in what have been bear markets in the stock market, what looks like it's rolling over to the bear market in commodities. And it's the great reversion of 2022 just accelerating. And crypto's breaking down. Bitcoin has been one of the leading indicators on the way up, and it's a leading indicator on the way down, and it's just broken down. So expect most dominoes to follow. The number one asset class that's still up on the year, and it's still kind of sticking, is I think it's waiting for a head-sledge hammered upon it, is our commodities. Now, croppers dropped about 20% in the year, lumbars dropped about 60%. Those are the darlings of the bull market from 2020 to last year's high. The key one that really needs to break down is Crudel. Now Crudel West Brent got to near $100 last week on clear short covering. I pointed it out in futures, and it's heading lower now, and I fully expect that is the key sore thumb that needs to break down hard. The key fact is almost always in global economic cycles, commodities rally and expansions and decline in contractions. We're heading towards a contraction, and commodities are still expensive. They typically have to get cheap, have to get low to help the economy reset, to help bring on that demand and help pressure that supply. And they're nowhere near that, even close. Let's look at WTI, around $85 a barrel. The cost of production, the world's largest producer, the U.S., is around $40 a barrel. I fully expect Crudel to break down towards those levels. I've been early, I've been wrong early, did not kind of look like an idiot early in the year, went to $130, but now that pump is helping accelerate the dump, not profound with what Crudel almost always does. You need pretty significant lower plateau in risk assets, and a good leading indication for commodities that go lower. So, lower stocks, lower commodities, potentially a bottom in, I think, fully expect long bonds to start being one of the better performers that we head towards inflation. You still stand by your prediction that we're going to transition from an inflationary to a deflationary environment next year, potentially, with a recession. And you said multiple times that in such an environment, Bitcoin, together with gold and treasury bonds will come out ahead, so they will perform well. So, now I would like to know, on the background of this latest crisis that we are witnessing, how has this view of yours changed? So, from a lower plateau, unfortunately. So, I fully expect Bitcoin is going to, at some point, return to its longer term enduring upward trajectory and get towards $100,000. Something has to really change, supply going down, demand and adoption going up. Now, right now, we're hitting a blip. Now, we've had a lot of blips like this in the past. We've suffered a thousand cuts and we've survived. But the key thing that really needs that trajectory to start, first of all, it has to show a bit of a foundation bottom. And that's probably going to take the federal funds rate expectations to stop going up in terms of yield and start going down. There's still around 5% for a year from now. That's pretty high. Now, that starts trickling down. We start seeing the Fed easing, central banks coming off this aggressiveness. Then, I fully expect long bonds and gold will be some of the better performers. US Treasury long bonds will be some of the best. They've been beat up. This is one of the worst bear markets ever for bonds. But I think that's going to form that foundation for them to go back to that enduring deflationary trend. So it's not that profound. It's just what was happening before. And I think it's going to accelerate. And Bitcoin's part of that, the key thing, remember, Bitcoin's only been around for a little bit more than a decade. It's a nascent asset plastic. And also, it's still on risk on as we just found out with a major catalyst. Sam Banquenfried going down was a severe shock.