Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, has recently suggested that Bitcoin’s (BTC) underperformance compared to the stock market may be a warning sign for investors.
BTC’s Failure To Outshine In A Bull Market
McGlone notes that Bitcoin has declined compared to the Nasdaq 100 stock index since its 2021 peak and April bounce. This waning performance may presage rising headwinds not only for Bitcoin but also for the broader crypto market. McGlone stated:
If Bitcoin truly is the “fastest-horse-in-the-race,” as some consider it to be, then it should logically be outperforming in an everything bull market. However, that is not the case.
Notably, McGlone points to the most aggressive liquidity pull from central banks in history, which may be a significant factor in Bitcoin’s underperformance.
The Federal Reserve (Fed) is still sighting in 3Q, despite the producer price index finished-goods gauge at minus 3.1% and dropping from 2022’s 18.3% peak at its fastest pace since 1948, which may be part of what underperforming Bitcoin is “sniffing out,” according to McGlone.
On a one-year basis to August 1st, Bitcoin is up just over 20%, similar to the Nasdaq, yet the crypto’s volatility is about two times greater.
McGlone believes Bitcoin’s underperformance may be a warning sign for the broader market. The fact that Bitcoin is not outperforming as it should be in an everything-bull market could indicate that more significant market issues are at play, particularly in the face of aggressive liquidity pulls from central banks.
Bitcoin And Ethereum Volatility At Historic Lows
In a statement shared with NewsBTC Luuk Strijers, the Chief Commercial Officer at Deribit, a prominent cryptocurrency derivatives exchange, has recently stated that the Deribit Volatility Index (DVOL) for both Bitcoin and Ethereum is currently trading at an all-time low.
This is a significant development, especially since the DVOL for ETH is trading below the DVOL for BTC, which is a rare occurrence and may have been caused by the activity of a single large trader, commonly known as a whale.
Despite the current low levels of volatility, Luuk Strijers highlights that the market is anticipating a considerable upswing in volatility shortly. This expectation is driven by several factors, including the upcoming ruling on the Blackrock spot Exchange-Traded Fund (ETF) and the approaching Bitcoin Halving.
Strijers notes…
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