Global commodities could be about to take a hit, the move might translate into some relief for Bitcoin and the crypto market. The nascent asset class has been experiencing downside pressure as the U.S. Federal Reserve (FED) is set to stop inflation from worsening.
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At the time of writing, Bitcoin (BTC) trades at $31,300 with a 4% profit in the last 24-hours. In the past week, the benchmark crypto records a 6% profit. BTC’s price has finally broken its consecutive weeks of trading in the red.
The trend could extend in the short term. According to a report from Senior Commodity Strategist for Bloomberg Intelligence Mike McGlone, commodities might be about to take a turn to the downside.
The report claims the following as it examines the Bloomberg Commodity Spot Index and the factors hinting at an increase in selling pressure for this sector:
Commodities may be swinging toward the downside in 2H, just like they did in 2008, We see parallels in 2022 and rising risk for a similar, roughly 50% plunge (…). Slumping lumber and copper may be early warnings that the higher price cure is gaining traction.
The Russia-Ukraine war, McGlone said, and a dropped in global liquidity. The expert claims the expansion of money supply in the U.S., as a result of the COVID-19 pandemic, is reversing.
With the narrative shifting away from this disease, the perception that the world is moving on from COVID-19, and high inflation in the U.S., is the key factor behind the increase in commodities. This could be a headwind for this sector in the short term, but good news for Bitcoin. McGlone noted:
If commodities keep rising, there are more threats to economic growth, and the Federal Reserve could be further emboldened vs. inflation. Gold may be a 2H price leader.
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