Mike McGlone, senior commodities strategist at Bloomberg Intelligence, shared the potential implications of Bitcoin’s (BTC) recent performance for the broader U.S. stock market.
In particular, in X’s August 10 post, McGlone suggested that Bitcoin, a key indicator in the risk asset space, could be maturing quickly, especially in the context of U.S. exchange-traded funds (ETFs). However, this maturation could put significant pressure on the stock market.
He pointed out that Bitcoin has seen a noticeable drop from its previous highs, and McGlone believes that this trend exposes vulnerabilities in the stock market. As of August 10, 2024, Bitcoin was trading at around $60,000, a level last seen in March 2021.
During the same period in 2021, the expert noted that the S&P 500 index was trading at around 3900. By August 9, 2024, it had risen to 5344.
McGlone’s analysis found that Bitcoin’s recent slide, which briefly saw the leading cryptocurrency fall below $50,000, could be an “undue burden” on the stock market, which remains strong despite the cryptocurrency sector’s woes.
This comparison highlights the potential gap between Bitcoin’s performance and traditional risk assets like the S&P 500.
“The fall of Bitcoin could become an excessive burden on the US stock market, preventing it from remaining at a high level,” the expert noted.
Bitcoin’s Role in the Broader Market
According to the strategist, Bitcoin trades 24/7 and increasingly acts as a leading indicator of broader market sentiment. As Bitcoin continues to evolve, especially with the growing presence of ETFs, its moves could carry more weight in influencing other markets.
However, this also means that when Bitcoin fails, it can have broader implications for the stock market.
Overall, McGlone’s findings suggest that the fate of the U.S. stock market may be more closely tied to Bitcoin than previously thought, especially as the cryptocurrency market matures and becomes more integrated into the mainstream financial system.
It is worth noting that Bitcoin and the entire stock market have recently seen capital outflows amid fears of a recession in the US.
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