Bitcoin’s price fell below $60,000 on Tuesday and Wednesday after posting big gains over the weekend following the Fed’s pivot to lower interest rates. The spot price briefly peeked over $65,000 before coming back down.
But Bloomberg’s McGlone is bearish despite the market’s moves. He thinks BTC’s apparent lack of enthusiasm might signal a slow-going road forward for the highly secure Web3 property.
Bitcoin to U.S. Stocks Multiple
Is the fastest horse signaling the race is over? At about 11x now, the #Bitcoin/S&P 500 peak was 15x in 1Q20 and this years lower high was 14x. The biggest money pump in history and US ETF launches in past tense may suggest a hangover, pendulum swing back toward 7x Bitcoin/SPX.… pic.twitter.com/dGGk0bYKRo
— Mike McGlone (@mikemcglone11) August 27, 2024
On Tuesday, McGlone asked his followers on X, “Is the fastest horse signaling the race is over?” He said the Fed’s biggest money pump ever and the ETF listings in the rear window “may suggest a hangover” for bitcoin.
The Bloomberg Intelligence strategist’s argument is that the ratio of bitcoin’s price to the S&P 500 Index is looking anemic compared to recent market history. “At about 11x now, the #Bitcoin/S&P 500 peak was 15x in [1Q21] and this years lower high was 14x.”
It’s a like-with-like comparison because bitcoin is a factor of its market capitalization, and the S&P 500 is calculated from the market cap of the companies that make it up, using an index divisor for all the math whizzes watching CNBC.
But if bitcoin has made it to 15x the S&P 500 Index once before, in March 2021, and almost did this year, then it can do it again. That’s what BTC bulls like Marathon Digital are counting on in the near term when they double down on the asset.
Bitcoin Price to $81,000?
If bitcoin were to reach 15x the S&P500 again, it would tap $81,818 even if the index stayed at the same level today. That could mean there’s lots of room left for the largest crypto to rally higher on this turn of the super cycle.
That figure is interesting because Blockstream CEO Adam Back recently targeted an $80,000 bitcoin price prediction based on one hedge fund analyst’s MicroStrategy stock forecast. McGlone says the ratio shows weakness in BTC markets, adding that Bitcoin is suffering from a hangover. However, it could indicate BTC is underpriced relative to cyclical trends.
If the S&P 500 Index grows apace of its 2024 returns and bitcoin’s price reaches 15x its level again, BTC could be changing hands above $98,000. So, this multiple shows that there’s plenty of room left for this bull to run.
Moreover, the last time bitcoin markets achieved this multiple was ten months after the third halving. So far, it has been only five months since the fourth halving this year.
When this hangover washes out, some diamond hands might have profits on them. The hair of the dog, anyone?