Bloomberg senior strategist Mike McGlone said bitcoin could fall to $10,000 if the US equity market enters a full bearish cycle.

Bloomberg assessment

McGlone pointed to a set of market conditions that, in his view, increase downside risk for bitcoin and other risk assets.

• He says US equities look overheated, with market capitalization to GDP at a century high.
• He noted that S&P 500 volatility is unusually low by historical standards.
• He described the crypto sector as experiencing a deflation of speculative excess.
• He observed that precious metals such as gold and silver are capturing investor capital.

Scenarios for bitcoin

According to McGlone, an initial decline could see bitcoin return toward ~$56,000 before a larger negative scenario plays out.

In the baseline adverse scenario outlined by the strategist, bitcoin could ultimately reach $10,000.

Key trigger

The principal condition for such a substantial drop is a US recession combined with a peak in the domestic equity market, the strategist believes.