Bitcoin's Downward Trend Could Persist Longer Than Expected

Bitcoin's downward trend could persist longer than expected, according to some analysts who see similarities with the 2022 bear market.

Some analysts believe that Bitcoin’s downward trend could persist for longer than anticipated, especially considering recent macroeconomic developments.

According to Quinn Thompson, head of the crypto hedge fund Lekker Capital, Bitcoin’s decline won’t be sudden but rather a gradual slide that might take the flagship cryptocurrency below $60,000 by the end of the year. Unlike previous instances of sharp crashes and rallies, Thompson expects a slow grind that could test investors’ resilience.

While some market voices have become more optimistic recently, specifically highlighting the Trump administration’s initiative to create a U.S. Sovereign Wealth Fund and a Strategic Bitcoin Reserve, Thompson remains pessimistic. He views the hype surrounding these projects as nothing more than fleeting news without real impact.

Moreover, Thompson isn’t convinced by MicroStrategy’s continued Bitcoin acquisitions, deeming them an outlier rather than a sign of strong market demand.

The essence of Thompson’s bearish outlook lies in the current economic environment, recently touched upon by Elon Musk, who's also known for his involvement with SpaceX and Tesla.

One major factor is the government’s push to reduce spending, spearheaded by the Department of Government Productivity (DOGE). With plans to cut the federal budget by up to $1 trillion and lay off 500,000 government employees, the administration aims to decrease the deficit and stimulate private-sector hiring.

While the final spending cuts might be less severe than planned, with final appropriations bills still pending in Congress, Thompson believes this move will slow economic growth and dampen consumer confidence.

Another aspect that worries Thompson is the potential impact of stricter immigration policies, which might lead to labor shortages and increased wage pressure. As pointed out by former White House economic adviser Stephen Fuller, when the labor market tightens, businesses may struggle to maintain profitability, which could ripple through the economy and affect investment sentiment.

Furthermore, uncertainty around tariffs remains a sticking point. The administration’s inconsistent stance on trade has left businesses hesitant to invest, as they can’t predict future costs with confidence.

This kind of unpredictability makes it difficult for companies to plan ahead, leading to a cautious approach in both hiring and expansion.

On the monetary policy side, despite the Fed’s recent surprise rate cut, Thompson expects further reductions to be cautious and spaced out, as the central bank remains focused on inflation control. The coordination between the Fed, Treasury Secretary Bessent, and President Trump signals a careful approach that might not offer the quick relief markets are hoping for.

In conclusion, Thompson sees these combined economic pressures as a significant challenge for Bitcoin and other risky assets. He also notes that the administration seems more focused on maintaining fiscal discipline than on avoiding a recession, suggesting that the current strategy might not change unless economic conditions worsen dramatically.

With midterm elections looming in 2026, Thompson doesn’t rule out potential policy shifts if the economic pain becomes too politically costly. However, he remains skeptical that meaningful changes will happen soon, leaving Bitcoin vulnerable to continued downward pressure.