Bloomberg Intelligence macro strategist Mike McGlone has issued a stark warning regarding the current state of the cryptocurrency market, indicating that the recent decline in crypto prices may signify broader financial distress. In a post on social media platform X, McGlone suggested that Bitcoin could potentially decline to around $10,000, a scenario he believes may also hint at an impending recession in the United States.
After recovering to $70,841 on February 15 from a low of $65,395 on February 12, Bitcoin was trading around $68,800 by mid-morning. However, the overall cryptocurrency market exhibited troubling signs, with 85 of the top 100 tokens recording losses. Privacy-centric cryptocurrencies such as Monero and Zcash suffered significant downturns, falling 10% and 8%, respectively, within that 24-hour period.
McGlone remarked on the potential shift in market sentiment, stating, “Healthy correction is what we should hear soon from stock market analysts (who risk unemployment if not onboard), following collapsing cryptos.” He suggested that the long-held “buy the dip” mentality, which has supported risk assets since the 2008 financial crisis, may no longer be effective as the performance of digital assets deteriorates.
Several macroeconomic indicators cited by McGlone signal heightened risk. He noted that the U.S. stock market capitalization relative to gross domestic product (GDP) has reached levels not seen for almost a century. Alongside this, volatility in the S&P 500 and Nasdaq 100 has dropped to its lowest rate in approximately eight years.
In an analysis of the so-called “crypto bubble,” McGlone stated that it appears to be “imploding,” attributing this trend to the fading of “Trump euphoria” and its resultant contagion across various markets. Interestingly, he highlighted that traditional safe havens like gold and silver are gaining traction at unprecedented rates, suggesting a potential uptrend in volatility that could spill over into equities.
McGlone shared a comparative analysis between Bitcoin and the S&P 500, emphasizing that if the equity market weakens, Bitcoin’s price is unlikely to remain above certain levels. He noted that an initial “normal reversion” target for the S&P 500 stands at 5,600, which would equate to approximately $56,000 for Bitcoin. However, he also posited a more bearish scenario in which Bitcoin might revert to the $10,000 range, contingent upon a peak in the U.S. stock market.
The analyst’s predictions sparked varied opinions within the financial community. Market analyst Jason Fernandes, co-founder of AdLunam, critiqued McGlone’s viewpoint, arguing that it is based on the assumption that market extremes can only be resolved through collapse. Fernandes suggested that markets can recalibrate through other means, such as time, rotation, or inflation adjustments. He posited a potential for a $40,000 to $50,000 price recalibration rather than a catastrophic plunge to $10,000.
Furthermore, Fernandes cautioned that a drop to $10,000 would likely necessitate severe systemic events, such as marked liquidity contractions and widespread credit issues, requiring more than just slower growth to materialize. He concluded that, barring a significant credit crisis or a policy misstep that drains global liquidity, the likelihood of such a drastic collapse remains low.
