Bloomberg Commodity Strategist Mike McGlone Predicts Potential Bitcoin Price Correction
Bloomberg commodity strategist Mike McGlone tweeted that, based on historical data, the current Bitcoin-to-gold ratio suggests that Bitcoin’s price might experience a significant correction in the future. He pointed out that the Bitcoin-to-gold ratio peaked at 40 times in 2024. At the same time, the total market capitalization of the U.S. stock market to GDP ratio reached 2.2, a level similar to historical peaks in 1929 (the Wall Street Crash) and 1999 (the Dotcom Bubble), implying that the current market may be overvalued.
(Background: ETH exchange inventory hits 10-year low, Bitfinex Bitcoin long positions hit 6-month high, is a rebound coming?)
(Context: Arthur Hayes: Bitcoin may have bottomed out at $77k, but the U.S. stock market must continue to fall for Powell to print money… Hold cash.)
After the inauguration of the new U.S. President Trump, his series of economic policies have raised concerns about an impending recession. In this context, many investors have shifted their funds to safe-haven assets such as gold and U.S. Treasuries. Before this, Bitcoin, known as “digital gold,” hit a historical high of $109,382 on Inauguration Day (1/20) with Trump’s support. Although Bitcoin’s price has declined alongside the U.S. stock market and is now at $86,567, many analysts believe that after bottoming out at $77,000 in mid-March, Bitcoin will continue its rally and attempt to reach $100,000.
Further Reading: Arthur Hayes: I Bet Bitcoin Will First Rise to $110,000 Instead of Falling to $76,000, Fed Slowing Balance Sheet Shrinkage Like a QE
Bloomberg Analyst: Bitcoin May Face Major Correction
Yesterday, Bloomberg commodity strategist Mike McGlone tweeted that, based on historical data, the current Bitcoin-to-gold ratio suggests that Bitcoin’s price may face a significant correction in the future:
“Did Bitcoin Peak vs. Gold? The Ratio May Suggest a Great Reset – The mantra that hope is not a good investment strategy could be playing out in the decline in the number of gold ounces that’s equal to a Bitcoin. History may judge 2024’s 40x peak in the ratio and 2.2x in US…”
McGlone pointed out that the Bitcoin-to-gold ratio peaked at 40 times in 2024. At the same time, the U.S. stock market’s total market capitalization to GDP ratio also reached 2.2 times, similar to the historical highs seen in the U.S. in 1929 (the Wall Street Crash) and 1999 (the Dotcom Bubble), suggesting that the current market may be overvalued.
McGlone added that his research shows that when the Bitcoin-to-gold price ratio reaches such extremes, it typically reverts to normal levels (Bitcoin correction). This not only affects the trend of the cryptocurrency market but also triggers a chain reaction in other financial markets.
Gold Expected to Surge to $3500 in Q3, Bitcoin to Test $65,000?
According to previous reports by BlockBeats, analysts from Macquarie Group predict that gold’s safe-haven appeal will continue to strengthen, with spot gold expected to surge to $3500 per ounce in Q3 this year. Goldman Sachs raised its year-end gold price target to $3100 per ounce last month.
Cointelegraph analyzed that the current Bitcoin and gold trends align with historical patterns, particularly the BTC/XAU bearish divergence pattern from March 2021 to March 2022, characterized by a price increase and a decline in the Relative Strength Index (RSI), which shows a weakening upward momentum. The BTC/XAU ratio initially fell to the 50-2W exponential moving average (EMA) support level, eventually plummeting by 60%, coinciding with Bitcoin’s 68% drop.
Currently, the BTC/XAU ratio has completed two phases of EMA retests. With the RSI showing a bearish divergence, momentum seems to be weakening, increasing the likelihood of further decline, especially if the ratio decisively breaks below the 50-2W EMA support level (~26 XAU, currently at 28.74). In this case, $65,000 could become the next potential downward target for Bitcoin, indicating a drop of approximately 40% from its historical peak of $110,000.
However, Nansen analysts believe that this drop is a “pullback in a bull market,” and if the 50-2W EMA remains supportive, the possibility of a bull market recovery increases. However, if the EMA is completely broken, Bitcoin could enter bear market territory. If the BTC/XAU bearish divergence repeats, Bitcoin’s downward target for 2025 could move towards the $34,850 support level at the 200-2W EMA.
