Mike McGlone, a macro strategist with Bloomberg Intelligence, shared on Monday that the recent drop in cryptocurrency values might indicate broader financial stress ahead. He suggested that Bitcoin could potentially fall to around $10,000, which might signal the onset of the next U.S. recession.
In a recent post, McGlone noted that the long-held sentiment of buying assets during dips, a trend that began back in 2008, might be showing signs of fatigue as digital currencies weaken and market volatility shifts.
Bitcoin initially rose from $65,395 on February 12 to $70,841 by February 15, then settled around $68,800 later that morning. However, the overall cryptocurrency market saw declines that day, with 85 out of the top 100 coins experiencing losses. Privacy-centric currencies, like Monero and Zcash, dropped by 10% and 8%, respectively, in the last 24 hours.
McGlone expressed the need for analysts to start acknowledging the necessity of a healthy market correction in light of the crypto downturn. He remarked that the consistent “buy the dip” narrative since 2008 may no longer be applicable.
He pointed to multiple macroeconomic indicators signaling increased risk. The market capitalization of the U.S. stock market relative to GDP has reached a nearly century-high, while the 180-day volatility for the S&P 500 and Nasdaq 100 is at an almost eight-year low, according to McGlone.
Describing the current situation as the “bursting” of a crypto bubble, he indicated that the exuberance surrounding Trump has peaked and its effects are rippling through the market. Additionally, he noted that gold and silver are gaining value at a pace unseen in almost fifty years, with an uptick in volatility that could eventually affect equities.
In a visual comparison of Bitcoin against the S&P 500, McGlone’s chart illustrated that both remained under 7,000 as of February 13. He stated that if overall equity beta weakens, Bitcoin, being inherently volatile and reliant on beta, is unlikely to exceed that threshold.
According to McGlone, the S&P 500 level of 5,600 translates to about $56,000 for Bitcoin within his framework. He considers this a crucial “return to normal” point, with projections suggesting that Bitcoin could revert to $10,000, particularly if the U.S. stock market peaks.
Opinions vary regarding McGlone’s predictions.
Jason Fernandez, co-founder of AdLunam and market analyst, conveyed to CoinDesk that McGlone’s perspective implies that extreme market conditions must conclude with a sharp decline, arguing that Bitcoin’s stock beta will lead to a similar downturn.
Fernandez critiqued this view as presenting a “false equivalence” and a “single-path bias,” suggesting that the market might stabilize through longer adjustments, shifts in asset rotation, or reducing inflation. He noted that a macroeconomic slowdown could lead to consolidation or reset Bitcoin values between $40,000 and $50,000, rather than a drastic plunge to $10,000.
He added that for Bitcoin to hit the $10,000 mark, there would likely need to be a significant systemic event, such as a severe contraction in liquidity or chaotic capital withdrawals.
“It’s not merely about slowing growth; it signifies recession and financial strain,” he explained. “Unless there’s a credit shock or a policy misstep leading to reduced global liquidity, such a collapse would remain an unlikely scenario.”
