MarketsBitcoinOpinion
|5 min ReadBitcoin Faces 1929 Echo as Risk Premium Rebuilds
Tariq Al-Saidi
Senior Analyst
Published
Jan 16, 2026
Bloomberg Intelligence senior macro strategist Mike McGlone is warning that crypto may be tracing a path that looks uncomfortably familiar to historians of the 1929 peak. His point is not that Bitcoin is “doomed.” It is that the market setup can shift from momentum to purge while participants are still arguing about whether a bubble even exists.
The comparison he highlighted runs through the Bloomberg Galaxy Crypto Index, normalized against the Dow’s arc a century ago: strong run-up, widening speculation, then a slow rollover that convinces traders to keep buying pullbacks until the pullbacks stop being small. In his view, that is the dangerous part. The turn lower begins quietly, then the system finds the leverage.
McGlone notes Bitcoin is down only about 5% in 2025 through Dec. 14, and he treats that “resilience” as a risk, not comfort. If the market is late-cycle, small declines can be the calm period where positioning stays crowded because it still feels safe.
Why peak analogies show up before bottoms
Macro crash analogies usually surge near highs because that is where incentives collide. The bulls want confirmation that the new regime is permanent. The bears want proof that the top is in. That argument itself becomes a signal that the trade is crowded.
Bitcoin’s core challenge is correlation. In stress regimes, it trades like broad risk. When equities de-risk, crypto rarely gets to be an island. That does not mean Bitcoin cannot outperform. It means it often has to endure the same deleveraging machinery: vol targeting, margin compression, and systematic cutting when realized volatility rises.
That is why “purge” language matters more than it sounds. A purge is not one red candle. It is a multi-stage process where the market repeatedly sells rallies as exposure is reduced across spot, derivatives, and corporate proxies. If you are looking for a clean capitulation day that ends the pain, that may be the wrong mental model.
The Bitcoin to gold ratio is the real pressure gauge
McGlone’s sharper framework is the Bitcoin-to-gold ratio, which he treats like a thermometer for speculative excess. He points out the ratio ended 2022 near 10, expanded during the crypto rally, then fell about 40% this year to around 21.
That number matters because it reframes the debate away from Bitcoin’s absolute price and toward relative demand for volatility versus safety. A move back toward 10 by 2026, as he suggests, can happen in more than one way. Bitcoin can fall. Gold can rise. Or both can happen at the same time, which is how ugly macro tapes usually look when real yields, growth fears, and liquidity shifts start pulling in the same direction.
For traders, this is a cleaner dashboard than most narratives. When the ratio is rising, crypto is being rewarded for taking risk. When it falls, the market is paying a premium for liquidity and defensiveness. If you want one signal for whether the market is in “buy dips” mode or “sell rallies” mode, this ratio is a candidate.
What a purge scenario would look like into 2026
McGlone’s most extreme marker is the idea that Bitcoin’s run above $100,000 may have laid the groundwork for a long pullback, with $10,000 cited as a possible destination into 2026. Treat that not as a forecast you must believe, but as a stress test: what conditions would have to exist for that path to become plausible?
First, the market would need a sustained tightening in effective liquidity, not just policy headlines. You can get that from risk-off shocks, slower growth, or a regime where credit becomes more expensive and leverage shrinks everywhere at once.
Second, the unwind would have to hit the highest-supply, highest-beta segments first, then roll downhill. That typically starts with speculative assets that lack natural holders and ends with forced selling from participants who thought they had time. Crypto often compresses these stages because it trades 24/7 and uses leverage as a default tool.
Third, you would likely see the “bubble debate” persist even as the market weakens, because that debate keeps participants anchored to prior highs. That anchoring is how rallies get sold. Every bounce feels like the return of the old regime until it does not.
If you are navigating this tape, the practical stance is not to worship a single analogy. It is to recognize the regime shift risk. Watch whether Bitcoin can decouple from broad risk on down days, not up days. Watch whether relative safety continues to win via the Bitcoin-to-gold ratio. If those signals keep leaning defensive, the market is telling you the purge thesis is still alive, even if the chart looks calm.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.