Bitcoin’s correction may be starting. In fact, the cryptographic sector as a whole could be facing a severe bearish trend reminiscent of 2022.
“I could see us returning to a handle of five for the end of the year,” he told Coindesk in an interview Quinn Thompson, founder of the Crypto Coverage Fund, Lekker Capital, in an interview. A “Mango Five”, that is, a price between $ 50,000 and $ 59,999, would decrease substantially due to the current level of current $ 83,000 and approximately a 50% decrease in Bitcoin’s peak above $ 109,000 just over two months ago.
“I do not think it happens quickly, so it would be very painful and shocking for people because nothing about the current market conditions is very volatile, with large liquidations and accidents,” Thompson added. “It is this type of different market environment, a slow routine that is almost more unbearable for people because they say: ‘Is it over? Is the background?'”
Thompson, who had been bassist from much higher levels, has repeatedly called the cryptographic ads of the White House, be it the Wealth Sovereign Fund or the Bitcoin strategic reserve, or anything in the middle, “Nothingburgers” and “Sell the news” events. He has also argued that constant purchases of Bitcoin strategy (MSTR) are not necessarily optimistic for cryptocurrency, since they seem to be the only significant offer.
The four winds against the economy
The Thompson thesis center is the idea that the various Trump administration policies will probably damage the economy for the next six to nine months.
First, the Government Efficiency Department (Doge), in its efforts to reduce the American deficit, is determined to reduce government spending, which has been one of the greatest drivers of employment growth in recent years. The labor market was already wobbly when the Biden team delivered the reins to Trump, said Thompson, and the fiscal arm of the new government is no longer interested in supporting things.
“People are trapped in its policy,” said Thompson. “We can disagree on whether we need the Department of Education or not. But those dollars were printed and entered into people’s pockets, and those people spent them, and the grocery store were already on vacation. Therefore, it was a positive growth.”
Elon Musk, the main force behind Doge, said last week that aimed to reduce $ 1 billion in government expenses at the end of May; He also said he wanted to reduce 15% of the annual government expenditure, which means almost $ 7 billion.
Even if Doge fails his declared objective and only manages to cut, say, one hundred billion over the course of four years, the largest cuts are likely at the beginning of Trump’s term, not at the end, Thompson argued. This means that Dog’s impact on the economy and the feeling of the consumer sits in the coming months, regardless of whether the agency really succeeds or not.
Second, the repression of illegal immigration on the southern border, combined with the emphasis renewed in deportations, is obliged to affect the labor market, said Thompson. Migration is positive in growth because it exerts pressure on wages; If that labor group dries, workers will require higher wages, that some companies will not be able to pay.
Thompson’s third problem is rates. The Trump administration continues to change its tariff threats on a day -to -day basis, sometimes promising new, sometimes canceling them, creating doubts about whether most proposed tariffs will really really come into force. But the important thing about tariffs is that they create uncertainty for companies, which can choose to delay investment or hiring decisions until the situation of the rate is resolved.
Finally, the Federal Reserve does not seem to be in a hurry to loosen financial conditions because inflation data has not been excellent. The Central Bank of the USA fulfilled interest in a complete percentage point at the end of 2024, to 4.25%-4.5%, and even that was not enough to exceed Bitcoin above $ 110,000. Thompson says he expects the FED to reduce between 25 and 75 basic points in 2025, but that these cuts will extend in the second half of the year.
“I think there is much more coordination between the treasure and the Fed of what people want to believe,” said Thompson. “People thought Trump and [Fed chair] Powell would be arguing, but they are really in the same team at this time. [Secretary of Treasury] Besent and Trump are reducing growth, and that helps Powell achieve lower inflation. “
When will the background be?
With such winds against working against risk assets such as actions and Bitcoin, it is unlikely that the cryptographic sector has a good year, Thompson said. The fact that the White House does not seem too worried about a possible recession is also a strong sign, he said.
“Besent has been saying: ‘We need to correct the ship’. And correcting the ship means cutting the juice that was promoting these prices of crazy assets.
But how long is Trump probable to keep the course? Until he becomes too painful and even Trump’s political base tells him to cut it, or until the beginning of 2026, he cannot take a country to a recession with half -period elections.
“I will match this with a controlled burn. They are trying to clear the brush so that it does not become a major problem. But sometimes controlled burns become forest fires,” said Thompson. “I think it will be a long job throughout the year while trying to promulgate these policies.”
