Bitcoin price drop to $10,000? How ‘post-inflation deflation’ resembles the 2008 crash

Bitcoin’s Value Under Threat

Bloomberg analysts are raising alarms about Bitcoin, suggesting it could lose as much as 90% of its current value. That’s a stark prediction.

Mike McGlone, a senior analyst at Bloomberg Intelligence, recently commented that the economy is transitioning into what he calls a “post-inflationary deflation,” signaling an impending recession. He forecasts Bitcoin’s price might drop to $10,000 by 2026.

According to McGlone, if Bitcoin had peaked at around $100,000, we might see a dive back to $10,000 soon. He cautions that a return to wealth creation could trigger recessionary trends, largely due to the fall of speculative digital assets that lack proper oversight.

His concerns gain weight as Bitcoin’s value has already dipped 30% from its all-time high of nearly $126,000, currently hovering around $90,000. Just last December, it traded between $85,000 and $95,000.

This year has been challenging for Bitcoin, which has dropped 13%. In contrast, other assets like stocks and gold are thriving. For instance, the S&P 500 index rose by 17%, and gold is projected to climb by 64% next year.

McGlone elaborates on this notion of “post-inflation-deflation.” He believes Bitcoin’s downturn reflects similarities to stock performance in 2007 when the Fed began changing rates. He previously made a bearish forecast, hinting Bitcoin could fall to $50,000 by November.

Recent market actions reveal that $230 million in long Bitcoin positions were liquidated over the last day, while only $60 million in short positions faced similar outcomes. It seems many were caught off-guard by the price movements.

On a different note, Bitcoin exchange-traded funds managed to attract $287 million last week, even after experiencing a $3.5 billion decline following a tough November.

Upcoming Economic Indicators

This week is significant for central banks globally, with interest rate decisions anticipated from the European Central Bank, Bank of England, and Bank of Japan. The U.S. markets are gearing up for crucial economic updates, particularly after the Federal Reserve recently slashed interest rates to their lowest in three years, igniting debates about the labor market’s condition.

In a recent decision by the Federal Open Market Committee, a 0.25% rate cut was enacted, albeit with dissent from three members. Chair Jerome Powell acknowledged that job growth might have been exaggerated for quite some time.

These developments will greatly influence expectations about future interest rate adjustments from the Federal Reserve, with questions looming over whether further cuts can be implemented into 2026.

Ed Yardeni, from Yardeni Research, notes that this week will unveil delayed government indicators regarding employment and inflation, acting as a barometer for economic health as the year winds down.