Bloomberg Strategist Warns Dogecoin, Altcoins Face 1929-Style Crash

Mike McGlone, the chief commodity strategist at Bloomberg Intelligence, has issued a warning to Dogecoin holders and the broader crypto community. He drew parallels between the current state of the crypto market and historical instances of market excess, specifically the 1929 stock market crash and the 1999 dot-com bubble. McGlone highlighted the risks associated with speculative behavior in digital assets, particularly Dogecoin.

McGlone emphasized that Dogecoin is particularly vulnerable to a potential market reversion. He pointed out that the ratio of gold ounces equal to Bitcoin trading almost tick-for-tick with Dogecoin may indicate the risks of reversion in highly speculative digital assets. This comparison suggests that Dogecoin's trajectory is closely tied to the same market forces that have historically challenged highly speculative assets.

McGlone's analysis extends beyond Dogecoin. He also discussed the possibility of gold reaching $4,000 per ounce, linking this to dynamics in the bond market and potential declines across risk-on sectors, including cryptocurrencies. He stated that a path toward $4,000 an ounce for gold could require a reversion in "silly-expensive" risk assets, notably cryptocurrencies. If the US stock market remains under pressure, bond yields might eventually be pulled lower by the comparatively meager yields seen in China and Japan. This scenario could drive investors toward alternative havens like gold.

McGlone's analysis is supported by visuals that show the persistent divergence between US Treasury yields and the comparatively subdued rates of Chinese and Japanese government bonds. The S&P 500’s market cap-to-GDP ratio remains historically high despite recent volatility. McGlone concluded that continued pressure on equity markets, combined with global bond rates that sit well below US yields, could accelerate a rotation into gold if investors perceive a downturn in "expensive" asset classes, including risk assets like Dogecoin.

In another post, McGlone addressed the broader altcoin market, pointing to Ethereum as a leading indicator of whether the overall trend has turned bearish for digital assets. He noted that Ether, the No. 2 cryptocurrency, is breaking down, with deflationary implications and gold underpinnings. This suggests that the broader altcoin market may be following a similar trajectory to Dogecoin, with potential risks of reversion and a shift towards more stable assets like gold.