Bitcoin (CRYPTO: BTC) rallied as high as $73,000 amid traffic in the Strait of Hormuz clogging up, but Bloomberg Intelligence commodity strategist Mike McGlone warned oil volatility will spill into stocks and crush crypto, calling Bitcoin a “bear market” asset heading lower.

The Oil Volatility Threat

McGlone explained on Thursday that Bitcoin’s price performance remains closely tied to volatility in U.S. equities, particularly the Nasdaq, which must remain near historically low volatility levels for risk assets to rally.

“The bottom line for these highly volatile risk assets to go up is Nasdaq volatility,” McGlone said. “If volatility from commodities and crude oil trickles over into the stock market, that’s bad for crypto.”

The Strait of Hormuz closure briefly pushed Brent crude above $85, making a new high above last year’s level. 

However, McGlone views this as a classic peak signal. The December contract, which will be front month right before the midterms, trades around $70 and is probably heading toward $58.

McGlone expects the Iran situation subdued by midterm elections. “The leader of the world’s largest energy producer, a net exporter of crude oil and natural gas, wants lower prices for midterms. He’s going to get them.”

The Structural Oversupply

The Western Hemisphere is now the price maker in crude oil. Massive excess supply from the U.S. and Canada runs close to 8 million barrels per day of surplus supply versus demand.

The Hormuz closure is temporary. Insurance companies are managing the situation within a couple of days, and the strait will likely reopen completely. 

“You need some kind of sustained supply curtailment in the Middle East, which is unlikely,” McGlone said.

Five decades of war gaming prepared the world’s largest military to handle this situation. If it’s not resolved favorably before midterms, the Trump administration faces a big problem. McGlone expects leadership to say “that one’s done” before voters head to the polls.

The Bitcoin Bear Case

McGlone called Bitcoin a “bear market” asset, calling it a “worthy short” near $94,000 earlier this year with minimal support around $64,000. 

Bitcoin now faces resistance at $74,000 and must hold above that level to maintain momentum.

The broader problem is structural. “The whole space is heading lower. There’s an unlimited supply of cryptocurrencies,” McGlone said. Trump probably marked the peak for crypto.

The key risk is volatility spillover from commodities into equities. If oil and precious metals volatility trickles into the stock market, Nasdaq volatility will rise from near 10-year lows. That environment kills crypto, particularly Bitcoin.

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