Shock Warning: Is Dogecoin Repeating the 1929 Tragedy?

Bloomberg Intelligence's chief commodity strategist, Mike McGlone, has issued a stern warning to Dogecoin holders and the cryptocurrency community at large by comparing it to historical cases of market excess. In a series of recent posts published on X, McGlone referenced the years 1929 and 1999—infamous periods of stock market crashes and the dot-com bubble—to highlight the risks of "foolish" speculation in digital assets. Dogecoin Reflects Risk in 1929 Style He specifically pointed out Dogecoin, emphasizing its vulnerability to potential market reversals, while also noting that gold would be the beneficiary if risk appetite continues to worsen. "Dogecoin, 1929, 1999 The folly of risk assets and gold – The gold ounce to Bitcoin ratio trading almost tick-for-tick with Dogecoin could indicate the risk of reversal in highly speculative digital assets, with deflationary impacts underpinning this metal," he wrote. The chart below shows how closely the market capitalization of this meme-inspired cryptocurrency reflects the Bitcoin-gold ratio. Monitoring these two metrics shows that whenever the relative value of Bitcoin to gold changes, the trajectory of Dogecoin will change dramatically, subjecting it to the same market forces that have historically challenged high-speculative assets.

McGlone's broader thesis does not end with Dogecoin. In another post, he shifts attention to the concept of gold reaching $4,000 an ounce, linking such potential to momentum in the bond market and the potential for a downturn in risk areas, including cryptocurrencies. "What drove gold to $4,000? 2% Treasury bonds? Melting cryptocurrencies could pave the way – The road to $4,000 an ounce for #gold may require something that is often just a matter of time: the reversal of absurdly expensive risky assets, especially cryptocurrencies," he stated. He emphasized that if the U.S. stock market remains under pressure, bond yields could ultimately be pulled down lower due to the relatively meager yields of 2% or less in China and Japan. In McGlone's view, such a scenario would provide additional momentum for gold as the shift from relatively high-yielding Treasury bonds to lower-yielding government bonds abroad could drive investors toward alternative safe havens. The chart shared by McGlone reinforces his analysis of the slowing demand for risky assets. An image titled "U.S. Stocks Rise, Bond Yields Compared to China, Japan" shows the persistent divergence between U.S. Treasury yields, hovering around 4.19%, and the relatively low government bond interest rates of China and Japan, at nearly 2% and 1.51%, respectively.

The chart also illustrates the market capitalization to GDP ratio of the S&P 500, which remains historically high despite recent volatility. McGlone's conclusion is that continuous pressure on the stock market, combined with global bond yields much lower than those in the United States, could accelerate the shift towards gold if investors perceive a downturn in "expensive" asset types, including risky assets like Dogecoin. The third post refers to the broader altcoin market, with McGlone pointing out Ethereum as a leading indicator of whether the overall trend is shifting bearish for digital assets. "Has the trend turned bearish? Ethereum may lead - Ether, the number 2 cryptocurrency, is declining, with deflationary impacts and a gold foundation," he noted. At the time of the press release, DOGE was trading at $0.16663.