Several alarming signals have been noted at once for the financial markets. Bloomberg Intelligence strategist Mike McGlone believes that gold looks overheated, while researchers at Global Markets Investor reported a record level of leveraged trading in the US markets. Together these observations create a fragile picture for risk assets, including bitcoin (BTC).
Both theses point in the same direction: the markets are overloaded with bets on growth, while defensive assets are losing their footing. In that case, any reversal in sentiment could trigger a chain reaction.
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McGlone: gold may have passed its peak
In McGlone's view, January–February may turn out to be an opportunity to sell gold, which has been rallying. In particular, after a price drop of roughly 30%, it "would be normal" for the precious metal to bounce off the steep support mark of around $4,000 per ounce. But the overall picture, according to the analyst, looks overheated.
The strategist offered a telling comparison: for the first time since 2007, gold's 180-day volatility is trading at a premium of about 2.3 times the volatility of the S&P 500 index. This shift has turned the precious metal into a speculative risk asset. In the past, a similar situation preceded the Great Recession and signaled low stock-market volatility.
When gold reached a price peak of around $5,500 in February, it stood at a forty-year high relative to its 60-month moving average and the US government bond curve. Under these conditions, most central banks switched to raising rates.
The rise in the yield on 30-year US government bonds to almost 5.2% in May — the maximum since 2007 — could create headwinds for assets that generate no income. In McGlone's opinion, gold risks ending up in a losing position relative to equities.
Source: BeInCrypto
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