Bitcoin Volatility is likely to remain elevated in the near term, and prices could fall further, as crypto markets grapple with a liquidity squeeze and deeply fractured sentiment, according to Sygnum Bank chief investment officer Fabian Dori.
But the long-term outlook, he maintains, remains intact.
“We can see that volatility remains high in the short term, and prices could even decline from now on,” Dori told CoinDesk in an interview. “Sentiment has collapsed. Investor confidence to generate exposure is very limited.”
The recent divergence between gold, which has held firm, and innovation assets like Nasdaq tech stocks and bitcoin underscores how fragile the current environment has become. However, Dori warns against searching for a single explanation.
“There is no single cause, indicator or factor behind this gap,” he said. “They are a series of elements that have been accumulating in recent months.”
Crypto markets have trended lower in recent months, with bitcoin and other major tokens retreating from previous highs as macroeconomic headwinds and uneven institutional flows weigh on sentiment. Persistent inflation and changing expectations about Federal Reserve rate cuts have dampened risk appetite, while periodic geopolitical flare-ups have reinforced a broader shift away from speculative assets. At the same time, choppy exchange-traded fund (ETF) flows, lower liquidity and bouts of leveraged liquidations have magnified bearish moves, leaving prices struggling to regain momentum and repeatedly testing key support levels.
thin ice
Cryptocurrencies, Dori maintains, have been “on thin ice” for some time.
Long-term holders have become cautious about bitcoin’s four-year cycle and the risk of entering a correction phase. That caution has left the ecosystem on a more fractured footing, with fewer strong hands willing to absorb volatility.
On top of that are cryptocurrency-specific liquidity strains and broader macroeconomic pressures.
Since June of last year, the issuance of U.S. Treasury bills and notes has significantly increased balances in the Treasury General Account (TGA) at the Federal Reserve. When those notes are issued, liquidity is effectively withdrawn from the markets and remains dormant.
“They are non-productive assets,” Dori said. “And cryptocurrencies, being one of the most liquidity-sensitive asset classes, were among the hardest hit.”
A record liquidity event on October 10 further reduced risk appetite among investors and market makers, he said, accelerating the deterioration of crypto market depth. Funding rates collapsed and liquidity conditions worsened.
At the same time, concerns ranging from bitcoin’s store of value narrative to the risks of quantum computing, the forced sale of reserves by digital asset treasuries and delays around US legislation, including the long-awaited Clarity Act, have compounded uncertainty.
With sentiment already fragile, even minor headlines now trigger huge price swings.
“The ecosystem was already on thin ice because of the dynamics of the cycle,” Dori said. Then you add additional liquidity constraints and a feeling of collapse, which is a very vulnerable setup, he added.
Since early October, bitcoin has seen declines of approximately 40% to 50% from its recent highs. The last time markets experienced declines of that magnitude was during the systemic crisis of 2022, prompting renewed fears of broader structural risk.
Dori rejects the comparison.
“From a macro perspective, regulatory clarity, institutional adoption and strength of counterparties, the current landscape is totally different from that of 2022,” he said. “This is not the same systemic risk environment.”
Liquidity transfer?
In Dori’s view, the current weakness reflects a short-term liquidity squeeze rather than a change in fundamentals.
Market data, he said, shows empirical signs of improvement beneath the surface.
The US business cycle is expanding. ISM services activity has expanded in recent months and manufacturing sector numbers have surprised to the upside, historically prerequisites for improving risk appetite.
At the same time, headline inflation remains above the Federal Reserve’s 2% target, but is nowhere near the levels that previously fueled deep concerns about trade policy or tariffs. The trend, Dori said, appears moderate enough to allow the Federal Reserve to continue its rate cut cycle in the coming months.
“That would improve liquidity conditions again,” he said.
Treasury-driven liquidity pressures could also ease, setting the stage for a faster-than-expected turnaround ahead of the next Federal Open Market Committee meeting, Dori added.
From a crypto-native perspective, the fundamental context remains constructive. Stablecoin growth continues, integration into traditional finance is expanding, and the number of native tokens locked on networks like Ethereum and Solana remains strong.
Institutional adoption, although uneven, is still progressing.
“Once sentiment normalizes and liquidity conditions improve, the gap between traditional assets and cryptocurrencies should narrow again,” Dori said.
Looking for a trigger
For now, however, sentiment is the dominant force.
Fear and greed indicators are at extreme fear levels, underscoring how little appetite there is to rebuild exposure. “That clearly indicates that trust is very limited,” Dori said. “We need some kind of trigger.”
What that catalyst might be is less clear.
Passage of comprehensive crypto legislation in the US, such as the Clarity Act, would be “an extremely positive development,” he said. A normalization of geopolitical tensions could also help restore broader investment appetite.
Improving AI-related concerns and sustainability narratives could provide additional tailwinds. Meanwhile, a further recovery in liquidity conditions, combined with continued institutional inflows, would reinforce the constructive argument.
Until then, markets will remain exposed.
The short-term view, due to sentiment, is not very good, Dori said. But he remains confident that the structural foundation is stronger than it seems.
“Basically, we see improvement in business cycle data, stablecoin growth, institutional participation and stronger counterparty risk management,” he said. “That’s very different from what we saw in 2022.”
In Dori’s assessment, bitcoin’s current decline is less a verdict on its long-term viability and more a function of liquidity mechanics and broken trust.
Volatility may intensify before subsiding. Prices may even test lower levels. However, if liquidity conditions ease and macroeconomic data continues to strengthen, Dori believes the turnaround could come sooner than many expect.
For now, cryptocurrencies remain on the limit. But beneath the surface, he maintains, fundamentals are quietly improving.
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