Macro Strategist Speaks After Bitcoin’s Surge, Warns of “Death Spiral”

Speaking to Bloomberg, macro strategist Mark Cudmore evaluated the latest developments in the cryptocurrency market and their possible impact on stock markets.

According to Cudmore, the situation of companies holding digital assets, in particular, remains a source of concern in the markets.

Cudmore stated that the “pain” in the crypto market is not over yet, highlighting the dynamic created by companies like MicroStrategy, which hold significant amounts of Bitcoin on their balance sheets. While MicroStrategy's announcement that it has a reserve fund to cover the next 14 months of dividend payments is a relief for the markets, Cudmore remains cautious about the overall picture.

According to the analyst, digital asset-focused companies and their ETFs create a “multiplier” effect that amplifies market movements in both directions. He warned that if share prices fall below the value of crypto assets, these companies may be forced to sell their holdings, creating a “negative death spiral.”

Cudmore said the possibility of a “hawkish interest rate cut” from the Fed next week and the decline in the cryptocurrency sector, which could negatively impact individual investors, could hinder the expected year-end rally.

*This is not investment advice.