What Can Stop the Stock Market From Crashing?

As global markets brace for volatility, Bloomberg Intelligence strategist Mike McGlone argues that Bitcoin’s surprising resilience could be the last factor holding off a full-blown U.S. stock market crash. His latest analysis draws a line between the crypto market’s strength, gold’s record rally, and the S&P 500’s stretched valuations, all of which hint at an approaching turning point.

In an X post dated October 19, McGlone described Bitcoin’s ability to “stay lofty” as a top prerequisite for avoiding a deflationary downturn similar to those that historically follow inflationary surges. In other words, Bitcoin may be acting as an unlikely stabilizer in an increasingly fragile financial ecosystem.

Key Takeaways

• Mike McGlone identifies Bitcoin’s stability as the key factor preventing a broader stock market collapse.
• The S&P 500 trades at about 2.3 times nominal GDP, signaling overvaluation and potential reversion risks.
• Gold’s record high above $4,200 contrasts sharply with declining crude oil prices, a signal of global economic stress.
• A rebound in market volatility could either stabilize valuations or trigger the long-expected correction.
• Trade tensions between the U.S. and China add further uncertainty to global markets heading into Q4 2025.

Bitcoin’s Role as a Market Buffer

In a world where traditional indicators have grown unreliable, McGlone points to Bitcoin as an unexpected pressure valve. The logic is simple: if Bitcoin remains elevated, it reflects continued risk appetite and investor confidence in alternative assets. That sentiment can spill over into equity markets, keeping capital from fleeing into full risk-off mode.

However, McGlone warns that if Bitcoin falters—particularly if it corrects toward the $100,000 mark—it could signal that investor confidence is finally breaking. Such a move would likely cascade into equity weakness, especially given the close psychological link between tech stocks and digital assets in recent years.

Bitcoin’s performance in 2025 has mirrored broader macro uncertainty. Despite sharp pullbacks following renewed U.S.–China trade tensions, its resilience near key technical levels has reassured investors that risk appetite hasn’t completely vanished.

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The S&P 500’s Overvaluation Problem

McGlone’s analysis underscores one of the market’s biggest concerns: valuations are running historically high. The S&P 500’s capitalization currently stands at 2.3 times nominal GDP, implying that the market’s total worth now surpasses sustainable levels.

By comparison, the post-pandemic equilibrium hovered near 1.75 times GDP. If history repeats itself, a return to that ratio could mean a significant correction in equities.

This inflated market structure reflects years of accommodative monetary policy, aggressive liquidity injections, and investor complacency built on low volatility. But as global growth slows and inflation cools, the dissonance between economic reality and market pricing becomes harder to ignore.

Gold and Oil Paint a Recessionary Picture

While Bitcoin may represent speculative optimism, traditional commodities tell a more sobering story. Gold’s ascent past $4,200 marks an all-time high, signaling that investors are seeking safety from systemic risk. Meanwhile, crude oil prices have fallen steadily, suggesting declining industrial demand—a classic recessionary indicator.

McGlone interprets this divergence as a red flag. Historically, when gold outperforms oil, it reflects investor fear and expectations of slower global growth. In such cycles, capital tends to flow toward stores of value and away from production-linked assets.

“The rapid rise in gold versus the most significant commodity, crude oil, reflects a global economic-stress trajectory,” McGlone noted. Unless volatility returns to reprice risk effectively, he warns, this pattern could accelerate the path toward recession.

Volatility: The Missing Variable

Perhaps the most underappreciated element in McGlone’s analysis is volatility—or rather, its absence. The S&P 500’s 90-day volatility has dropped to its lowest point in nearly five years, a signal of extreme calm that often precedes turbulence.

Low volatility creates a false sense of security, encouraging leveraged bets and complacency among institutional investors. McGlone suggests that a rebound in volatility could paradoxically prevent a deeper crash by forcing markets to reprice risk in a controlled manner rather than through sudden panic.

If volatility returns gradually, it could allow valuations to normalize without triggering widespread sell-offs. But if it spikes abruptly, markets could face a chain reaction of liquidations similar to previous downturns.

The Bitcoin–Stocks Correlation

Bitcoin’s growing integration into mainstream finance has blurred the once-clear divide between crypto and equities. Over the past two years, the correlation between Bitcoin and the S&P 500 has risen as institutional adoption deepened.

This means that when Bitcoin rallies, risk sentiment across markets tends to improve. Conversely, a steep crypto correction can dampen confidence across tech and growth stocks. In McGlone’s framework, Bitcoin’s “staying power” is not just symbolic—it’s an active variable shaping risk dynamics in traditional markets.

That interdependence also explains why policymakers and strategists now track Bitcoin’s movements as closely as bond yields or employment data. In a digitized economy, crypto’s behavior offers real-time feedback on investor psychology.

The China Factor and Global Trade Tensions

Adding to the uncertainty are renewed trade frictions between the United States and China. Tariff threats and export restrictions have rattled markets, reducing demand for risk assets and intensifying the shift toward defensive positions like gold.

These tensions could pressure corporate earnings, disrupt supply chains, and compound global inflationary risks—all catalysts for a potential correction. McGlone’s assessment suggests that if geopolitical uncertainty escalates, Bitcoin’s performance could again act as a sentiment barometer: sustained strength might cushion global equities, while weakness could amplify fear-driven sell-offs.

Is the Market on Borrowed Time?

While McGlone’s tone remains cautionary, his argument implies that the current equilibrium is precarious rather than doomed. The market isn’t collapsing yet, but it’s standing on fragile pillars—high valuations, low volatility, and faith in digital assets as symbols of resilience.

If any one of those pillars cracks, the correction long anticipated by analysts could finally materialize. On the other hand, if Bitcoin and gold continue to hold firm while volatility gradually normalizes, markets could glide through a soft landing rather than a hard crash.

For now, investors remain caught between two realities: an economy flashing mixed signals and markets still priced for perfection.

Final Thoughts

Mike McGlone’s analysis captures a paradox at the heart of today’s economy. The very asset once dismissed as speculative—Bitcoin—may now be the stabilizer preventing broader collapse. Yet the same dependence on speculative confidence underscores how fragile this market truly is.

Heading into late 2025, the interplay between crypto resilience, equity valuations, and commodity performance will determine whether the U.S. experiences a soft correction or a full-blown downturn. Investors would do well to watch not just the S&P 500 chart but also Bitcoin’s next major move.

Read Also: Crypto Market vs Stock Market: Analysis of Profits

FAQ

Why does Mike McGlone believe Bitcoin is key to preventing a market crash?

He argues that Bitcoin’s resilience signals investor confidence. If it stays strong, it helps sustain risk appetite across equities, delaying or softening a market correction.

What is the S&P 500 to GDP ratio, and why is it important?

The ratio compares the total market value of U.S. equities to nominal GDP. At 2.3 times GDP, current valuations are historically high, suggesting potential downside risk.

How do gold and oil prices reflect economic stress?

Gold’s surge indicates rising demand for safe-haven assets, while falling oil prices point to weaker industrial demand—together implying global slowdown concerns.

Could rising volatility stabilize markets?

Yes. Gradual increases in volatility can help reprice risk and reduce leverage, preventing an uncontrolled crash driven by complacency.

What role do U.S.–China tensions play in market sentiment?

Trade disputes create uncertainty that weakens risk appetite, pressuring equities and cryptocurrencies while boosting demand for safe assets like gold.