 Do you feel absolutely sure that Bitcoin will skyrocket in 2024? Are you already preparing for the next parabolic move? Wait a second, let's not get caught up in the hype and listen to this guy. The leading asset on the way down in 2022 was Bitcoin, the leading asset on the way up in 2023 was Bitcoin and that's why this year is a test and I'm fearful that it's going to fail. So what are the assets that will come out ahead in 2024? And why might Bitcoin not be among them? We address these and more questions in our latest interview with Mike McGlone, senior commodity strategist at Bloomberg. Before we get started, as always, don't forget to smash the like button and subscribe to our channel. I'm Giovanni, your host and this is a Cointelegraph interview. Before we dive in, I'm thrilled to announce the upcoming return of BlockShow, the leading event in the crypto and blockchain industry. This time BlockShow is teaming up with BlockDown, a pioneer in the Web3 conference scene. Get ready to join us in Hong Kong for this crypto celebration from May 8 to 9. Click the link in the description below to learn more about this event. We are back in May 2024. And remember, early birth tickets are limited. And now let's get to the interview. You predicted that gold will outperform Bitcoin this year. Can you drive us through the rationale behind this prediction? The launch of Bitcoin ETFs, spot-based ETFs in the US, was one of the most extreme speculative frenzies I've ever seen in markets. It's also coming with the stock market all-time highs and the potential world hailing towards recession. Certainly have a downtrend in global GDP forecasts. And the US certainly heading that way. And we haven't started ease in rates yet. I mean, at least the US has and many major country has and typically takes long and variable lag to easing for risk gases to bottom. So I think we're in that late stage of, yes, the recession never came last year. It's coming now. I like to watch the Bitcoin to gold ratio because that ratio is usually leads beta. Beta is the stock market. It's been leading on the way up the last few years. Certainly, since the peak in 2021, it's been lagging. And now we have a situation where this risk asset, digital gold, which I fully believe in long term, it's got favorable supply and demand forces to make it go higher, has been pumped into the retail space. The key question I like to ask people and investors and anybody in this space now, do we really expect this highly speculative 24-7 high beta risk asset to outperform beta, meaning the stock market, even to go up if the stock market goes down. And to me, that's going to be the big test this year. I think the US stock market is going to go down for normal recession. Commodities are clearly in a recession. That's my main space. And if that's the case, the leading asset on the way down in 2022 was Bitcoin, the leading asset on the way up in 2023 was Bitcoin. And the risk is it just goes back down again in 2024 with potentially as a leading indicator for risk assets. The key moment that you are waiting for is a moment when the stock market is going down in a risk on environment and Bitcoin will go up, right? We can start seeing typical equity weakness for recession and Bitcoin not dropping on a risk-adjusted basis with that actually maybe staying stable or going up. That would be a good sign. But my point is we have not seen anything but a very high beta, high volatility, highly speculative asset outperform the stock market on the way down. And actually, I'll perform on the way up last year, but lately I've been pointing out it's not been performing like it used to as a high beta asset. And it's shooting as it becomes more arbed and is more futures in ETFs. And that's the key thing people have to remember about Bitcoin now. It's in the mainstream. It's not going to trade with the kind of volatility it has in the past. And it's going to probably trade more equities than gold. And it hasn't shown, like I said, last year all risk assets were back up and Bitcoin was just back up with risk assets. Analysts at Fidelity have looked at the performance of Bitcoin in 2023. Bitcoin has been rallying interest rates where we're going up. So that's unusual for an asset like Bitcoin, which usually goes up when the interest rates are low. Basically, we saw a high correlation between Bitcoin and gold and less correlation, less inverse correlation between Bitcoin and interest rates. So what do you think about this view? Well, they're pointing out facts. That's good. And it's about what it means for the future. So right now, the issue is the market is priced for an extraordinary amount of easing within the next year, up to 170 basis points. Now it's maybe 160. And that's just the classic. I think it's just silly, but the market's priced for that much easing. It's forgetting that things have changed. The Fed will not ease with ease it has in the past because of inflation it created with easing too much. That's the lessons that Fed Governor Waller just said recently and the market just hasn't figured out yet. So what Bitcoin has done in the past, it's needed fuel to go up. I mean, monetary supply increasing, risk assets going up and speculative risk on. Now that worked last year. It was a bounce. The monetary supply is still declining. To me, the risk is tilted towards risk assets going down, the stock market going down and forcing the Fed to ease because their price for too much easing right now and that dragging down most risk assets as we head towards a normal recession. The key test will be will Bitcoin trade well if the stock market goes down? The point is it hasn't got anywhere near that test yet. Like I said, everything Bitcoin was up last year. Stock market was up. So as far as interest rates, that's the key thing right now in the macro, the market's priced for so much ease which will help to keep the stock market elevated. I don't think it's going to get that ease unless the stock market goes down and makes them ease. And that means that's a pressure factor for this highly speculative 24-7 leading indicator risk asset called Bitcoin. Your view is a bit different from the one of the analysts at Fidelity because they point out in this report that the rally that we saw last year was mainly due to this higher correlation between Bitcoin and gold and less about the hype around the imminent approval of a spot Bitcoin ETF which I believe it's your view for last year Bitcoin rally. So Fidelity is a sell site shop, they're selling a product, they sell ETFs. I completely respect their views and things but remember where that's coming from. I'm completely unbiased. Bitcoin went up last year one of the number one reasons what you just mentioned beginning this interview because anticipation of ETFs being launched. As I pointed out a year ago that probably the best trade for that was GBTC. That's done, it's over. That dangling care is gone. That's why this year is a test and I'm fearful that it's going to fail. That's a good point of course. Fidelity has skin in the game. The analysts at Fidelity say that Bitcoin is highly correlated not so much to consumer price inflation but rather it's more correlated to basically monetary supply. Do you agree with this view and do you expect more liquidity to be injected into the market by the Fed this year? No, exactly. So that is probably right. But remember we have to be careful measuring 15 years. Most of it was just an asset asset. The last five years a little more relevant. Money supply is still tilting negative in this country, interest rates are very high. That's a major headwind for Bitcoin, particularly gold the more mature version. And like I said earlier liquidity comes from the Fed starting to ease. The markets price are so much easier this year. I think it's silly. It's priced for way too much liquidity to help save them. And Bitcoin will suffer, gold might suffer initially but I think a gold will come out ahead. That's the problem right now. I would like you to comment on the effects of the approval of the spot Bitcoin ETF. So you were saying that this was going to be basically by the rumor sell the new sort of event and that's actually what it turned out to be because we saw that the price of Bitcoin has fallen in the last few days following the approval. And basically now the question is how much further will it correct? The pivot for the breakout on the way up was above 30, 25, 30 and it just pumped it up to near 50. So normal Bitcoin movement is that's old resistance is probably new support. But again I'm looking for the indication see what happens how it goes. For instance as we record today almost all risks are down. The key thing I watch when a morning come in is the Chinese CSI 3000 index it just made a new multi-year low. So that means wealth leaving that in that deflationary environment the second largest economy equities are declining and Bitcoin and cryptos are down in an environment. That's my point is when the stock market in beta goes down Bitcoin goes down more and has been. And yet lately it hasn't been going up as much. A lot of people are expecting the next parabolic move for Bitcoin to start in the most following the Bitcoin halving. I guess you have a different view on this. Sure if the stock market is going up Bitcoin will probably go up. That's the bottom line Giovanni it's a known known. No known still mattered markets typically they're priced in. It's the unknowns that we have to be able to watch. And I think the most significant major force this year in the macro is we have a deflating situation in China very similar to peak Japan and peak Soviet Union about 30 years ago. That's potentially accelerating. We have the US stock market all record record highs and markets price for excessive amount of easing to help keep it that way. Bitcoin is a good leading indicator now Bitcoin goes up and the stock market goes down. Now that's a great sign of a new asset that is as can diversify a portfolio and outperform in different environments. But I expect it's going to just continue what it normally does. A lot of people are talking about the inflow of a huge amount of capital coming from institutions that are going to play a massive effect in the supply and demand sort of equation with Bitcoin that they are going to pump the price of Bitcoin up at least in the outerm. It looks like you have a much more critical view on this. Well the term I've heard from Bitcoin people and crypto people is Hopium. My editors don't seem to like that word so much at Bloomberg. I love that word Hopium. Sure if you get those flows then I'll help keep the price go up. But it's look what's happened recently. Now we're seeing flows in these new ETFs. A lot of it's come out at GBTC rightly so. GBTC is still the GLD of the space. It's 27 billion or so compared to all these other ones that are a couple billion. But let's remember the facts of the number one rule for investors and money managers and private wealth funds and RIAs is the rule of compounded returns of our time. Why is the world most institutions on the planet way under weighed gold. Pitifully maybe less than 1% of total portfolios. Why? Gold is traditional old school store value. It does not give you a return. And the competition right now is a UST bill 5%. Bitcoin is digital gold but there is no return. So we're talking about marketing these product to entities in the past that are all been focused on equities and compounded returns. And they're supposed to get over that hump that they've already passed on gold for this. Good luck. I mean I just heard it and seen it from people in the space but from my experience being with and at conferences and working with clients is yeah it'll be a toy. I mean I've always heard of toys in portfolios. It's a small part. But what's the earnings? Now that's where a theory might have an advantage. But Bitcoin has no earnings like gold has no earnings. And that's why traditional in the essence of compounding returns over time is you want earnings. My base case with the US recession just starting to kick in and it's the pendulum has swung from extreme recession way over to no recession. Now it just swings back a little bit. If Bitcoin can outperform in that environment that would really change my view of this being just a risk asset that's overhyped and over inexpensive right now. But we need to see that. So my base case to be clear is risk assets go down this year. Gold and long bonds outperform for typical deflationary recession. But it won't be typical because the Fed will not ease with the ease it has in my entire lifetime because the lessons of easing too much. Awesome. Thanks Mike. Let's see how things are going to play out this year. Thank you Giovanni. I'm looking forward to you maybe by the end of this year saying Mike you were wrong and everything's better and risk assets are up and we'll see how it works out. But I'm looking forward to our next interview certainly by the end of the year.