Several alarming signals have been noted for financial markets at once. Bloomberg Intelligence strategist Mike McGlone believes gold looks overheated, while researchers at Global Markets Investor reported a record level of leveraged trading in 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 safe-haven assets are losing support. In that case, any reversal in sentiment is capable of triggering a chain reaction.

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McGlone: gold may break through its peak

According to McGlone, January–February could become a once-in-a-lifetime opportunity to sell gold. Right now, after a price drop of about 30%, it "would be normal" for the precious metal to bounce off the round support level 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. The last time a similar situation preceded the Great Recession and exposed the weak volatility of the stock market.

When gold reached a price peak of around $5,500 in February, it was at a 40-year high relative to its 60-month moving average and a basket of US government bonds. At the same time, most central banks shifted to raising rates.

The rise in the yield of 30-year US government bonds to nearly 5.2% in May — the maximum since 2007 — could create obstacles for assets that do not generate income. According to McGlone, gold risks ending up in a losing position relative to equities.

Source: BeInCrypto