Bitcoin has recently received a dire warning from a prominent strategist, who has labeled it as an imploding bubble that could potentially plummet to the $10,000 price point. This forecast suggests an alarming 85% downside from its current levels, a scenario that may seem far-fetched to many but is hard to overlook given the source of the warning.
The well-known strategist, Mike McGlone from Bloomberg Intelligence, has expressed concerns about the current state of the cryptocurrency market. He believes that the crypto narrative needs a reality check as capital appears to be shifting away from digital assets towards what he refers to as the “AI scare trade.”
McGlone describes the situation as part of a post-inflation deflation cycle, where the most speculative assets are usually the first to feel the impact when inflation diminishes. He also highlights the close correlation between Bitcoin and tech stocks, which used to be beneficial but is now considered a risk factor. If tech stocks face pressure due to fears of AI disruption, it could drag down the crypto market as well.
In terms of Bitcoin’s price movements, McGlone points to the key level of $64,000 as a critical threshold. If the price falls below this level, he believes it could trigger a significant deflationary slide, potentially leading to a drop all the way down to $10,000. This scenario would represent a macro reset comparable to previous episodes in 2018 or 2022, driven by forced deleveraging events and systemic liquidity shocks.
Despite the outflow of approximately $678 million from Bitcoin ETFs in February, which has been part of a larger selloff since November, the overall assets under management in major vehicles remain significantly higher than pre-approval levels. While some on-chain models suggest a more moderate bear market floor near $55,000, McGlone’s analysis leans towards a more severe downturn.
He also points out the aggressive profit-taking in gold and silver markets, indicating a broader withdrawal of liquidity from risk assets. In such a scenario, Bitcoin would not be immune to the effects of this trend.
It is important to note that while Mike McGlone has been bearish on Bitcoin, his track record with specific predictions about the cryptocurrency has been mixed. Despite this, his analysis highlights the current challenges facing Bitcoin and the broader crypto market.
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In conclusion, the cryptocurrency market faces significant challenges, with Bitcoin in particular facing the risk of a deepening bear market. While warnings of a potential drop to $10,000 may seem extreme, they highlight the importance of monitoring market dynamics and being prepared for all eventualities.
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This article was originally published on Cryptonews.
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