Bitcoin tests $71,000, defying analysts’ expectations

But experts warn bitcoin could drop in tandem with stocks.

Senior Bloomberg Intelligence strategist Mike McGlone reaffirmed his forecast that the price of the first cryptocurrency could still collapse to $10,000.

He argued his stance on macroeconomic pressure and excessive speculation in the market. With institutions entering, bitcoin now moves in step with traditional assets, losing its status as an independent store of value.

The strategist is convinced the bear trend is not over and recommends using local rebounds to lock in profits.

Opposing views

Other market participants criticised McGlone’s forecast. Quantum Economics founder Mati Greenspan said that a plunge to $10,000 would require a global liquidity crisis or “physical destruction of the internet”. He believes bitcoin structurally bottomed in 2022.

PrimeXBT analyst Jonathan Randin also called the Bloomberg strategist’s prediction unlikely. He expects the next major demand zone to form between $30,000 and $40,000. In the short term, bitcoin will continue to trade in a $60,000–70,000 corridor. A rally to $80,000 is possible but will prove temporary under macroeconomic pressure.

AdLunam co-founder Jason Fernandes allowed for a decline in the leading cryptocurrency to $28,000. However, this would require severe financial stress, not a mere economic slowdown.

Market snapshot

At the time of writing, the first cryptocurrency trades around $70,000. The coin turned higher amid a sharp drop in oil prices. Following the flagship, Ethereum, Solana and XRP also rose.

Bitcoin’s trajectory stands out against traditional instruments. The Nasdaq 100 and S&P 500 were flat over the period, while gold posted only modest gains. For March, only the digital asset is in the black among these.

The coin is also reducing its correlation with technology stocks. Over the past five days, BlackRock’s spot ETF (IBIT) rose 3.75%, while the sector fund iShares Expanded Tech-Software lost 2.45%. Analysts hope for stabilization in the crypto market after a protracted decline.

Nansen analyst Aurélie Barther noted the resilience of digital gold to geopolitical tensions:

“The asset’s sensitivity to negative news turned out to be limited compared with traditional indices such as Euro Stoxx.”

In her view, this points to seller exhaustion.

Wintermute trader Brian Tan noted a paradigm shift in the relationship between bitcoin and gold: over the week, their correlation rose from -0.49 to +0.16.

Whereas at the start of the Middle East conflict investors exited cryptocurrencies in favour of precious metals, both assets now rise in tandem amid a weaker dollar. Tan believes perceptions of bitcoin are changing — it is no longer seen exclusively as a risk asset to dump during bouts of instability.

Rising prices are supporting interest in spot bitcoin ETFs. Joe Edwards of Enigma pointed to steady inflows into IBIT over the past two weeks.

According to SoSoValue, the fund attracted nearly $1bn in March, following more than $3bn of outflows from November to February. Edwards believes the redemption phase is over and, if current demand holds, the market will continue to recover in the second quarter.

Impact of oil prices

Swings in energy prices and global economic instability can spark high volatility in bitcoin. The first cryptocurrency still behaves like a risk asset rather than a safe haven.

Rising oil prices can accelerate global inflation, prompting central banks to delay rate cuts.

“Expensive energy raises inflation. Regulators maintain a tight policy, and this limits the inflow of liquidity so necessary for bitcoin,” — said Ripio exchange CEO Sebastián Serrano in an interview with DL News.

The US Commodity Futures Trading Commission classifies the first cryptocurrency as a commodity, on a par with gold and oil. In practice, however, the asset exhibits a very different dynamic.

The digital coin correlates with volatile investment instruments — for example, with technology stocks.

Kaiko analyst Lorens Fraussen stressed that bitcoin remains a risk asset and reacts sharply to macroeconomic shocks. He added that the narrative of cryptocurrency as an inflation hedge “has long since been refuted by the market”.

Historically, global crises have pressured the price of the first cryptocurrency. Experts warn that in the event of a major equity sell-off due to economic instability, the crypto market is highly likely to follow.

In March, Bitfinex analysts called oil prices the main driver of bitcoin’s exchange rate.