According to Bloomberg Intelligence’s senior macro strategist, Mike McGlone, the future may not be so bright for Bitcoin (BTC) and the broader cryptocurrency markets.

McGlone suggests that the second half of the year could bring bearish conditions for these digital assets due to several factors, including the potential for an economic recession and the Federal Reserve’s plans to increase interest rates.

Bearish Outlook Amidst Economic Uncertainty: McGlone points out that risk assets, including stocks and cryptocurrencies, could experience a decline in value as economic recession looms.

He believes that the ongoing cat-and-mouse game between the rallying stock market and vigilant central banks could pose challenges for risk assets like cryptocurrencies.

The inability of the Bloomberg Galaxy Crypto Index (BGCI) to sustain above its 2018 high in 2023 may be indicative of the Fed’s tightening policies impacting the crypto market negatively.

Bloomberg Economics Predicts an “Ugly” Second Half: McGlone highlights the Bloomberg Economics team’s prediction of a potentially “ugly” second half for both cryptocurrencies and equities.

This prediction is based on the observed divergence between the Nasdaq 100 Stock Index, which has been rising, and the falling BGCI in the second quarter of the year.

Additionally, rising rate-hike expectations in the Federal funds futures could limit the upward potential of crypto prices, acting as a potential ceiling for their growth.

Rally and Shift in Bias: Despite the recent rally of around 50% for the BGCI and 30% for the Nasdaq by June 1, McGlone suggests that these gains might not be sustainable in the face of looming economic uncertainty.

As a recession typically results in risk assets becoming more affordable, McGlone indicates that cryptocurrencies could also experience a decline in prices as a result.