Bitcoin's Stability Unlikely to Last, Warns Top Bloomberg Strategist

Bloomberg Intelligence's top macro strategist, Mike McGlone, warns that Bitcoin's current stabilization around $60,000 is unlikely to prove the long-awaited cyclical bottom. He believes a final bottom forming at these levels is 'unlikely,' and the market is on the verge of a broad return to historical averages.

The main argument against the durability of the current bottom is the unprecedented liquidity shortage in the crypto market. Bitcoin is squeezed by fierce competition from traditional finance, with too much competition for non-income-producing assets from the US Treasury 10-year yield's move above 5% in 3Q. When risk-free U.S. Treasury bonds offer a guaranteed yield of 4.95%-5.00%, while the S&P 500 Total Return Index is pushing to new all-time highs, institutional capital simply sees no reason to hold positions in volatile Bitcoin, which generates no passive income.

McGlone notes that historical reference points can be drawn from WTI crude oil in 2008. 'Guidance for Bitcoin's direction may come from WTI crude oil's downward price path since its first month-end close above $100 a barrel in February 2008,' the strategist says. Similar rules of supply-and-demand economics may continue to pressure Bitcoin since it first closed above $100,000 in January 2025.

The Bloomberg Intelligence warning is more than a bearish manifesto; it's a roadmap for those looking for exceptionally attractive entry points. The market's true phase of deflationary cleansing will begin alongside a correction in overheated U.S. stocks. A top prerequisite for typical post-inflation deflation hasn't yet occurred, about a 20% drawdown in the US stock market that stays down for a while.