Geopolitical tensions and tightening liquidity could trigger a major sell-off across equities and cryptocurrencies, according to Bloomberg Intelligence senior macro strategist Mike McGlone.

Bitcoin Could Revert Toward Long-Term Mean

McGlone warned in an interview with Cointelegraph on Saturday that escalating tensions between U.S. and Iran could pressure global risk assets.

He predicts U.S. equities could decline by as much as 50%, a scenario that would likely pull crypto markets lower as well.

The Bloomberg Galaxy Crypto Index has already fallen more than 50% from its peak, highlighting weakening momentum across digital assets.

Because cryptocurrencies, such as Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) rely heavily on excess market liquidity, McGlone said a potential reverse wealth effect from falling stock prices could hit crypto first.

He argued that crypto markets often act as early indicators of tightening liquidity, predicting that Bitcoin could eventually fall toward $10,000, returning to its long-term average as speculative excess from the previous cycle is removed.

"We had the biggest money pump in history pump up all risk assets," McGlone said. "Crypto led the way up. Now they’re leading lower."

Market Downturn Could Echo 2008 Crisis

McGlone also warned that escalating geopolitical tensions could trigger a market downturn like the 2008 financial crisis.

He pointed to extreme volatility in commodities, particularly oil and gold, as signs of growing instability that could eventually spill into equities.

Currently, he said the S&P 500 appears unusually calm despite historically elevated valuations.

McGlone also highlighted a disconnect in market volatility, noting that gold's volatility is nearly 2.5 times higher than that of the S&P 500, challenging its traditional role as a stable store of value.

He added that the recent surge in oil prices following disruptions around the Strait of Hormuz may prove to be a temporary bull trap, like spikes seen in 2008 and 2022.

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