Analyst Warns Bitcoin Shows Signs of Market Weakness as Price Reflects S&P 500 Comparisons
In a recent analysis shared on X, Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, posits that the current trajectory of risk assets may have reached its conclusion. According to McGlone, Bitcoin is reflecting signs of a potential ‘hangover’ resulting from its previous highs.
As Bitcoin (BTC) struggles to replicate its peak established in March, McGlone emphasizes an alarming correlation: Bitcoin is currently valued at approximately 11 times the value of the S&P 500 index, which is itself nearing its historical highs. In stark contrast to this, McGlone recalls that during the first quarter of 2020, Bitcoin achieved a significant peak of 15 times the S&P 500, a record that has yet to be surpassed. He suggests that the market may anticipate a potential adjustment, projecting a decline of as much as 50% from this unprecedented high.
McGlone poignantly questions, “Is the fastest horse signaling the race is over?” He articulates that, with Bitcoin trading at approximately 11 times the S&P 500 now, the previous peaks were notably higher, with recent trends indicating lower highs at 14 times. The considerable influx of capital, colloquially referred to as a money pump, combined with the recent history of U.S. Exchange-Traded Funds (ETFs) has led McGlone to support his assertion of Bitcoin undergoing a market ‘hangover.’ Her further expands on this theory, remarking that Bitcoin may indeed be in the process of ‘rolling over’ as it succumbs to market pressures.
Furthermore, McGlone’s analysis is corroborated by the findings reported by Cointelegraph, which illustrate Bitcoin’s underwhelming performance relative to other risk assets including gold and the S&P 500, the latter of which has recently witnessed notable all-time highs.
In terms of market activity, Bitcoin’s price has demonstrated volatility around the $60,000 mark as of the opening on August 28, according to data from Cointelegraph Markets Pro and TradingView. The cryptocurrency experienced a notable decline to $58,000 following a liquidation cascade overnight. Prominent trader Crypto Chase expressed that despite the lack of a distinct trend shift, the ongoing market consolidation may signal a forthcoming move. He noted that breaking the current trend could lead to new all-time highs, though he also acknowledged the possibility of lower lows occurring beforehand, which he views as a potential buying opportunity.
In conclusion, the present circumstances surrounding Bitcoin warrant extensive analysis and caution. Investors are advised to conduct thorough research and consider the inherent risks associated with trading and investment decisions.
Post Comment