Bitcoin is increasingly behaving like a high-risk stock market proxy rather than an independent asset, according to Mike McGlone, senior macro strategist at Bloomberg Intelligence. McGlone argues that the cryptocurrency's growing sensitivity to U.S. equity moves could expose it to a fresh wave of selling pressure.
Over the past five years, Bitcoin's performance has broadly tracked the S&P 500 despite experiencing nearly three times the volatility. McGlone contends that this combination makes Bitcoin a poor investment proposition if it continues to deliver stock-like returns while carrying significantly greater risk.
Three Pressure Points
McGlone identified three key concerns that could trigger a Bitcoin decline. First, U.S. equities appear stretched relative to their long-term trend, with the S&P 500 at a notable distance from its 200-week moving average, suggesting stocks could face a meaningful correction.
Second, Federal Reserve policy presents another pressure point. McGlone noted that fed funds futures indicate expectations for roughly 70 basis points of rate hikes over the next year, a shift that could create a tougher environment for risk assets like Bitcoin.
Third, McGlone highlighted Bitcoin's recent rebound toward the $80,000 resistance area as a warning sign. Rather than confirming a renewed bull market, he suggested the move could represent a temporary bounce before another leg lower.
Downside Scenario
McGlone's most bearish scenario places Bitcoin on a path toward $10,000, based on historical relationships between the cryptocurrency and broader risk assets. He believes a persistent 20% decline in the S&P 500 could potentially trigger a much deeper Bitcoin sell-off.
At $10,000, Bitcoin's market capitalization would fall to approximately $200 billion, compared with its current valuation of around $1.55 trillion. At the time of the analysis, Bitcoin was trading around $77,300, and has declined roughly 38.6% since hitting an all-time high of $126,080 in October.
