Bitcoin Faces 62% Drop to $40,000 as Deflation, Recession Loom, Strategist Warns

Bloomberg senior commodity strategist Mike McGlone has issued a warning that Bitcoin (BTC) could potentially drop to $40,000, despite currently trading above $100,000. McGlone's bearish outlook is tied to broader macroeconomic trends, particularly the risk of deflation and a long-delayed recession that could weigh heavily on risk assets like Bitcoin.

McGlone pointed to a recent peak in the Bitcoin-to-gold ratio in May, suggesting it may have topped out, especially if U.S. equity markets begin to decline. He noted that the ratio, which recently hovered around 33, could narrow significantly if gold strengthens and Bitcoin weakens, a scenario he views as increasingly likely.

“Bitcoin $40,000, Gold $4,000; Inflation vs. Deflation, Recession – The languishing price of Bitcoin vs. gold in 2025 may reflect anticipation of a typical cycle where deflation follows inflation,” McGlone said. In this scenario, investors may turn to traditional safe havens like gold if the economy contracts and the S&P 500 falls toward the 4,000 level. This could lead to gold surging to $4,000 an ounce, and the Bitcoin-to-gold ratio dropping to around 10, implying a BTC price near $40,000.

Such a decline would mark a 62% drop from its current price of $105,387. McGlone emphasized the evolving relationship between Bitcoin and gold, noting that gold’s recent outperformance of the S&P 500, despite competition from Bitcoin, could signal the early stages of a broader market correction.

Amid ongoing market uncertainty, including trade tariffs, gold has reached new highs while the stock market has experienced significant volatility. Bitcoin, meanwhile, has remained in consolidation above $100,000, recently hitting a record high of over $111,000.

McGlone’s analysis underscores the potential risks to Bitcoin in the event of a broader economic downturn. The strategist’s forecast highlights the interplay between macroeconomic trends and the performance of risk assets like Bitcoin, suggesting that traditional safe havens like gold could see increased demand in a deflationary environment.