Bloomberg Senior Analyst Mike McGlone Says Bitcoin Remains Tilted Toward Price Appreciation Despite Pullback

Bitcoin may have lost steam after touching $12,500 earlier in the week, but one of Wall Street’s most closely watched commodity analysts believes the leading cryptocurrency is still positioned for further gains. Mike McGlone, senior commodity analyst at Bloomberg Intelligence, argued on August 20, 2020 that Bitcoin remains tilted toward resuming its price appreciation, pointing to the relationship between BTC and gold as a key indicator.

TL;DR

• Bloomberg Intelligence senior commodity analyst Mike McGlone says Bitcoin is tilted toward further price appreciation
• The BTC-to-gold ratio stands at approximately 6x, the same level as in 2017 before a massive rally
• Bitcoin’s volatility has been decreasing relative to gold, which historically precedes upward price movement
• Institutional demand through Grayscale Bitcoin Trust and CME futures continues to grow
• The post-halving supply squeeze combined with rising demand creates a bullish fundamental backdrop

The Gold Ratio Signal

McGlone highlighted a compelling metric in his analysis: the price of Bitcoin per ounce of gold. This ratio has fluctuated between 3x and 9x over the past several years, and as of August 19, 2020, it sat at approximately 6x — the exact same level as in 2017, the year Bitcoin rocketed from $1,000 to nearly $20,000.

What makes the current setup particularly interesting is that Bitcoin’s volatility has been declining relative to gold. When the BTC-gold ratio sits in the middle of its historical range while Bitcoin’s volatility compresses, the tendency has been for the cryptocurrency to break out to the upside. McGlone characterized this dynamic as the crypto being tilted toward resuming appreciation based on volatility history.

Gold itself has been experiencing increased volatility as the US dollar swings back and forth in response to macroeconomic catalysts, including negotiations over the next round of stimulus spending and uncertainty surrounding the upcoming US presidential election. The contrast between rising gold volatility and declining Bitcoin volatility creates a setup that, in McGlone’s framework, favors the digital asset.

Supply and Demand Fundamentals Align

The Bloomberg analyst did not rely solely on technical signals. He pointed to fundamental drivers that reinforce the bullish case for Bitcoin. The most significant is the supply-demand dynamic that has intensified following the May 2020 halving, which reduced the block reward from 12.5 to 6.25 BTC.

McGlone emphasized that demand and adoption metrics remain favorable when measured against Bitcoin’s defining characteristic of fixed supply. Something unexpected would need to happen for Bitcoin’s price to stop doing what it has done for most of the past decade, he wrote, referring to the asset’s long-term appreciation trend.

On the demand side, McGlone highlighted two key institutional channels. The Grayscale Bitcoin Trust (GBTC) has been absorbing a significant portion of newly mined BTC, effectively reducing the liquid supply available on the open market. Meanwhile, the CME Group’s Bitcoin futures market has seen steadily increasing open interest, signaling growing institutional participation. Together, these vehicles represent the primary pathways through which traditional finance is gaining exposure to Bitcoin, and both have been trending sharply higher throughout 2020.

Context of the Current Pullback

McGlone’s bullish assessment came at a moment when Bitcoin was experiencing a notable pullback. After rallying to $12,500 on Monday August 17 — the highest level since March 2018 — the price had retreated to approximately $11,800 by August 20, representing a decline of nearly 6% in just three days. Some market observers interpreted the drop as the start of a deeper correction, with bears targeting a return to $10,000.

The correction coincided with a broader risk-off move across markets. The US dollar index (DXY) formed a bullish hammer reversal on its weekly chart, triggering selling pressure across commodities, cryptocurrencies, and equities. Gold pulled back from its record high above $2,000, and the S&P 500 showed signs of exhaustion after its own relentless rally.

However, McGlone’s analysis suggests that this pullback is a healthy consolidation within a larger bullish trend rather than the beginning of a sustained reversal. The combination of declining new supply from the halving, growing institutional demand, and favorable volatility dynamics creates what he views as an asymmetric setup skewed toward higher prices over time.

The Bigger Picture

Bitcoin’s year-to-date performance of over 60% has already validated the bullish thesis for 2020, but McGlone’s framework implies there is significantly more room to run. The cryptocurrency has been one of the best-performing assets of the year, outpacing gold, silver, and major stock indices. Ethereum has done even better, gaining over 100% year-to-date, while the total crypto market capitalization has grown by more than 80%.

The macro backdrop continues to support risk assets broadly. The Federal Reserve has committed to near-zero interest rates for the foreseeable future, and unprecedented fiscal stimulus has expanded the money supply dramatically. These conditions, which weaken the dollar and drive investors toward scarce assets, have been a primary catalyst for Bitcoin’s rally and show no signs of abating.

Why This Matters

Mike McGlone’s analysis on August 21, 2020 provided a data-driven counterpoint to the fear that was gripping the market during the pullback from $12,500. His framework — combining the BTC-gold ratio, volatility compression, supply reduction from the halving, and institutional demand growth — offered a comprehensive case for why the dip was likely a buying opportunity rather than a signal to exit. For investors trying to separate short-term noise from long-term trends, McGlone’s Bloomberg Intelligence research served as a valuable anchor in a volatile market.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always do your own research before making investment decisions.