Economist Henrik Zeberg has raised the alarm on Bitcoin (BTC) and the broader crypto market, calling it the clearest example of a financial bubble in today’s economy.
According to Zeberg, the speculative frenzy surrounding cryptocurrencies mirrors historical manias driven by breakthrough technologies such as the steam engine and the Dot-com boom, he said in an X post on July 30.
Zeberg pointed to a key macroeconomic indicator, the Market Cap to GDP ratio, which currently stands at 213% or 226% when cryptocurrencies are included.
“Just like in all Bubbles, new Technology is the driver of the speculation. This time around, the easy-money polices since 2008 has further fueled the mania,” Zeberg said.
He argued that this level signals a severe overvaluation, comparable to previous economic bubbles that ended in sharp collapses.
Interestingly, the expert does not believe the bubble is driven by the technology itself, which he acknowledges as revolutionary, but by irrational market exuberance.
In this case, he noted that past tech booms ended in crashes despite their long-term significance.
Bitcoin ‘technically overvalued’
While Zeberg is not calling a market top just yet, he warned that Bitcoin appears technically vulnerable at current levels. Indeed, the insights come as Bitcoin trades just below the $120,000 mark after retracing from the all-time high of above $123,000.
His chart analysis, which outlines a broadening diagonal pattern, projects a potential local top followed by a major decline. Momentum indicators such as the Relative Strength Index (RSI) also point to weakening strength on both weekly and monthly timeframes, suggesting the formation of a multi-year top.
Zeberg concluded that while the crypto rally may still have some short-term upside, the longer-term outlook is bleak.
Notably, the economist has previously warned that investors should expect both cryptocurrencies and the stock market to reach new highs before collapsing in a blow-off top.
As reported by Finbold, Zeberg believes the eventual crash could lead to the worst recession in history.
Featured image via Shutterstock.
