Bitcoin correction can just start. In fact, the cryptography sector as a whole could be faced with a strong downward trend recalling 2022.
“I could see us returning to a handful to five by the end of the year,” Coindesk Quinn Thompson, founder of Crypto Hedge Fund Lekker Capital, in an interview. A “handle to five”, namely a price between $ 50,000 and $ 59,999, would be considerably down compared to the current level of $ 83,000 already fragile and to around 50% of the drop in Bitcoin peak just than $ 109,000 just over two months ago.
“I do not think it happens quickly, which is why it would be very painful and shocking for people because nothing in the current conditions of the market is very volatile, with great liquidations and accidents,” added Thompson. “It is this kind of different market environment, a slow version that is almost more unbearable for people because they say to themselves:” Is it over? Is it the bottom? “”
Thompson, who had been lowering at much higher levels, has repeatedly called the White House crypto announcements – whether the sovereign fund or the strategic bitcoin reserve, or anything between the two – “Nothing Burgers” and “Sell the news”. He also argued that constant bitcoin purchases of the strategy (MSTR) are not necessarily optimistic for cryptocurrency because they seem to be the only important offer.
The four winds from the economy
Thompson’s thesis is the idea that the various policies of the Trump administration will probably harm the economy for the next six to nine months.
Firstly, the Ministry of Government (DOGE), in its efforts to reduce the American deficit, is determined to reduce public spending – which has been one of the largest employment growth engines in recent years. The job market was already wobbly when the Biden team has given Trump, said Thompson, and the tax arm of the new government is no longer interested in supporting things.
“People get caught in politics,” said Thompson. “We can disagree on the fact that we need the Ministry of Education or not. But these dollars were printed and went to people’s pockets, and these people spent them, and went on vacation and grocery store. It was therefore a positive growth. “
Elon Musk, the main force behind Doge, said last week that he was aimed at reducing 1 billion of dollars in public spending by the end of May; He also said he wanted to reduce 15% of government annual spending, which means nearly 7 dollars.
Even if Doge fails its declared objective and cannot reduce that, say, a hundred billion in four years, the larger cuts should occur at the start of Trump’s mandate, not at the end, said Thompson. This means that Doge’s impact on the economy and consumer feeling is felt in the coming months, that the agency really succeeds or not.
Secondly, the repression of illegal immigration to the southern border – combined with renewed deportations – is required to affect the labor market, said Thompson. Migration is a positive growth because it exerts pressure on wages; If this dry work pool, workers will require higher wages, which certain companies cannot afford.
The third issue of Thompson is the prices. The Trump administration continues to change its price threats on a daily basis, sometimes promising new ones, sometimes calling them, creating a doubt as to whether the majority of the prices offered will come into force. But the important price is that they create an uncertainty for companies, which can choose to delay investments or hire decisions until the tariff situation is resolved.
Finally, the federal reserve does not seem to be in a hurry to loosen the financial conditions because the inflation data has not been great. The American central bank reduced interests from a full point at the end of 2024, to 4.25% to 4.5%, and even it was not enough to push Bitcoin over $ 110,000. Thompson says that he expects the Fed to cut between 25 and 75 base points in 2025, but that these cuts will be distributed in the second half.
“I think there is much more coordination between the Treasury and the Fed than people want to believe,” said Thompson. “People thought Trump and [Fed chair] Powell would bicker, but they are in fact in a way in the same team at the moment. [Secretary of Treasury] Bessent and Trump reduce growth, helps Powell reduce inflation. »»
When will the bottom be?
With such opposites working against risky assets such as actions and Bitcoin, the cryptography sector is unlikely to have a good year, said Thompson. The fact that the White House does not seem too concerned about a potential recession is also a strong signal, he said.
“Bessent arrives by saying:” We have to straighten the ship “. And the recovery of the ship means cutting the juice that supplied these prices with crazy assets.
But how long is Trump likely to maintain the course? Until it becomes too painful and even the political base of Trump told him to cut him, or until the beginning of 2026 – you cannot push a country in a recession with an upcoming mid -term elections.
“I assimilate this to a controlled burn. They try to deliberately clean the brush so that it does not become a more important problem. But sometimes, controlled burns become forest fires,” said Thompson. “I think it will be a long type of slog throughout the year because they try to implement these policies.”
