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Bitcoin’s recent decline may be far from over, with some experts warning of a prolonged decline reminiscent of the 2022 bear market.
Quinn Thompson, founder of cryptocurrency hedge fund Lekker Capital, predicts that Bitcoin could fall below $60,000 by the end of the year, signaling a slow and painful grind for investors.
“I could see us back to five handles by the end of the year,” Thompson said in an interview. “Five handles” refers to a price between $50,000 and $59,999, a stark contrast to Bitcoin’s current shaky $83,000 level and a nearly 50% drop from its peak of $109,000 a little more than two months ago.
Unlike past crypto market crashes marked by extreme volatility, Thompson expects a slow descent that could test investors’ patience. “I don’t think it’s going to happen quickly, so it’s going to be very painful and shocking for people because nothing about the current market conditions is very volatile with big liquidations and crashes,” he explained.
The analyst has consistently maintained a bearish outlook, dismissing recent bullish rhetoric around crypto initiatives from the White House, including the U.S. Sovereign Wealth Fund and the Strategic Bitcoin Reserve, as “empty talk” and “sell the news” events. He also downplays the significance of MicroStrategy’s (MSTR) ongoing Bitcoin purchases, arguing that they represent one of the few consistent sources of demand in a weak market.
At the core of Thompson’s bearish thesis is his belief that the Trump administration’s economic policies will create challenges for the market over the next six to nine months. Thompson highlights four key challenges:
- Government Spending Cuts: Elon Musk’s Department of Government Productivity (DOGE) aims to reduce the U.S. budget deficit by cutting government spending, which has been a major driver of job growth in recent years. Musk has set an ambitious goal of cutting $1 trillion in government spending by May, and has a broader goal of reducing the federal budget by 15% ($7 trillion annually). Even if DOGE falls short, the cuts will likely impact consumer sentiment and economic growth in the near term.
- Fighting Immigration: The Trump administration’s renewed focus on border security and deportations could tighten the labor market. “Immigration is a positive growth driver because it puts pressure on wages,” Thompson said. Without a stable labor supply, businesses could struggle with rising wage costs, potentially leading to economic slowdowns.
- Tariff Uncertainty: The administration’s volatile stance on tariffs has created uncertainty for businesses, delaying investment and hiring decisions. While not all proposed tariffs are implemented, the unpredictability itself is a deterrent to market stability.
- Fed Policy: Despite a 100 basis point rate cut in late 2024, the Fed remains cautious about easing further amid ongoing inflation concerns. Thompson sees additional rate cuts of 25 to 75 basis points in 2025, but expects them to be spaced out in the second half of the year. “There’s a lot more coordination between the Treasury and the Fed than people think,” Thompson said, suggesting that Trump, Treasury Secretary Bessent and Fed Chair Powell are aligned in their efforts to curb inflation, albeit at the expense of asset prices.
As these economic pressures mount, Thompson sees continued downside risk for Bitcoin and other risky assets. He also sees the White House’s lack of urgency in combating a potential recession as a bearish signal.
While the administration appears committed to a strategy of fiscal tightening, Thompson suggests policy changes could come if the economic pain becomes too severe, especially ahead of the 2026 midterm elections.
*This is not investment advice.