Just came across an interesting take from Bloomberg's commodity strategist Mike McGlone on the current crypto bear market situation. He's suggesting that what we're seeing right now might actually be just the beginning of a larger downturn, which is worth paying attention to.

Here's what caught my eye - he's pointing out that if market risk starts declining, Bitcoin could potentially drop back to $10,000 levels. That's a significant call given where we are now. The reasoning behind this is pretty technical but important to understand.

Since Bitcoin ETFs started trading in January 2024, McGlone noted something interesting about volatility. The iShares Bitcoin Trust ETF and the SPY have shown similar returns, but here's the kicker - Bitcoin's volatility is roughly four times higher. Their 200-day correlation sits around 0.5, which basically means they're not moving in sync as much as you'd expect. When you get high volatility without the extra returns to justify it, that's typically not great for portfolio allocation.

What makes this crypto bear market analysis more compelling is the bigger picture he's laying out. Since Bitcoin emerged in 2009, we've seen an explosion of crypto assets - we're talking millions of them now. The problem? Most don't have real backing but are still valued in the billions. That's a red flag for the broader ecosystem.

The takeaway seems to be that the crypto market might need to shake out a lot more weakness before we see a real bottom. Something worth monitoring if you're positioned in this space.