Bitcoin News Today: Economist Warns Bitcoin Market 213% Overvalued Risks Bubble

Economist Henrik Zeberg has warned that Bitcoin and the broader cryptocurrency market represent a textbook example of a financial bubble, drawing comparisons to historical speculative episodes such as the Dot-com boom and the steam engine mania [1]. In a July 30 post on X, Zeberg highlighted how current market conditions are being exacerbated by years of accommodative monetary policy following the 2008 financial crisis, leading to a surge in speculative activity [1].

Zeberg pointed to the Market Cap to GDP ratio as a key indicator of overvaluation, which currently stands at 213% when excluding crypto and 226% when including it [1]. These figures, he argued, suggest the market is dangerously overextended, with risks of a sharp correction looming [1]. Despite acknowledging the revolutionary nature of blockchain technology, Zeberg emphasized that the current price action is driven by irrational market behavior rather than genuine technological progress [1].

Technical analysis conducted by Zeberg reveals a broadening diagonal pattern on Bitcoin’s price chart, signaling a potential local peak followed by a significant downturn [1]. Additionally, the Relative Strength Index (RSI), a momentum indicator, is showing signs of weakening strength on both weekly and monthly timeframes, suggesting the formation of a multi-year top [1]. Bitcoin, currently trading near $120,000, is seen as technically vulnerable after briefly hitting a record high of over $123,000 [1].

While Zeberg has not explicitly called a market top, he warned that the market could still see further short-term gains before facing a major correction [1]. He has previously expressed concerns that both the crypto and traditional stock markets could reach new highs before collapsing into a so-called "blow-off top," a pattern he believes could lead to an unprecedented global recession [1].

The debate over whether the crypto market is in a bubble continues to intensify. While some analysts argue that Bitcoin is fairly valued based on certain models [2], others highlight risks such as overleveraged Bitcoin treasury strategies and global macroeconomic threats [3]. Despite these cautionary signals, a segment of the market remains optimistic, with some forecasts predicting Bitcoin could reach $300,000 by next year [4].

Zeberg’s analysis underscores a growing unease among financial experts about the sustainability of the current crypto rally. His evaluation, grounded in both macroeconomic and technical indicators, suggests that while there may be room for short-term gains, the long-term outlook remains uncertain [1].

Source:

[1] Expert says Bitcoin is 'the very definition of this financial bubble' (https://finbold.com/expert-says-bitcoin-is-the-very-definition-of-this-financial-bubble/)

[2] 3 Reasons Why the Crypto Market Isn't in a Bubble (Yet) (https://www.aol.com/3-reasons-why-crypto-market-151100011.html)

[3] Next Crypto Crash: 6 Major Risks to Watch in 2025 (https://99bitcoins.com/analysis/next-crypto-crash/)

[4] Here's Why BTC Might Reach $300000 Next Year? (https://www.analyticsinsight.net/cryptocurrency-analytics-insight/bitcoin-news-today-heres-why-btc-might-reach-300000-next-year)