The price of bitcoin (BTC) should continue slow bleeding less, says Quinn Thompson

Bitcoin’s correction can only start. In fact, the crypto sector as a whole can face a severe downtrend reminiscent of 2022.

“I see us back in a five handle by the end of the year,” Quinn Thompson, founder of the Crypto Hedge Fund Lekker Capital, said CoinDesk said in an interview. A “five handles,” that is, a price between $ 50,000 and $ 59,999, will decrease significantly from that -Shaky current $ 83,000 level and approximately a 50% decline from Bitcoin’s peak of just over $ 109,000 more than two months ago.

“I don’t think this is happening quickly, which is why it is so painful and surprising to people because nothing about the current market conditions is very much -new, with big fluids and crashing,” Thompson added. “This is this kind of different environments on the market, a slow grinding that can hardly be noticed for people because they want, ‘Is it over? Is it under?'”

Thompson, who Bearish From the higher level, the White House’s announcements have repeatedly called-it has been the Sovereign wealth fund or strategic reserves of Bitcoin, or anything else between- “none of the people” and “sell the news” events. He has it too Argued That approach (MSTR) that continues to buy Bitcoin is not necessarily bullish for cryptocurrency, as they seem to be the only significant bid.

The four headwinds of the economy

Central’s thesis in Thompson is the idea that the different rules of the Trump administration are likely to be economically offensive over the next six to nine months.

First, the Department of Government Efficiency (DOGE), in its efforts to reduce US deficiency, has been bent over the cutting of government spending – which has been one of the largest drivers’ growth drivers in recent years. The labor market became wobbly when the Biden team gave Trump the stones, Thompson said, and the new government’s fiscal arm was no longer interested in processing things.

“People are caught in politics,” Thompson said. “We may not agree with whether we need the Department of Education or not. But those dollars are printed and into people’s pockets, and those people are spent, and went on vacation and to the grocery store. So it was positive to grow.”

Elon Musk, the main force behind the Doge, Says Last week aimed at citing $ 1 trillion in government spending by the end of May; He also said he wanted to cute 15% of the government’s annual expenditure, which means nearly $ 7 trillion.

Although DOGE has failed in its stated goal and only manages to cut, say, one hundred billion over four years, a larger cut is likely to take place at the beginning of Trump’s term, not the end, Thompson argued. This means that DOGE’s impact on the consumer’s economy and sentiment is likely to be felt in the coming months, even if the agency has really succeeded or not.

Second, the illegal immigration of the Southern Border – combined with the altered emphasis on deportations – depends on affecting the labor market, Thompson said. The transfer is positive for growth because it puts pressure on the wage; If that labor pool is drowned, workers will ask for a higher salary, which is not possible for some businesses.

Thompson’s third issue is tariffs. The Trump administration Constantly changing Its tariff threats on a daily basis, sometimes promise new ones, sometimes calling them, creating doubt as to whether most of the suggested tariffs will actually take effect. But the important thing about tariffs is that they create uncertainty for businesses, which can choose to delay investment decisions or rent until the tariff situation is resolved.

Finally, the Federal Reserve It seems to be in a hurry to loosen Financial conditions because inflation data has not been great. The US Central Bank cut off interest by a full percentage point by the end of 2024, up to 4.25%-4.5%, and even insufficient to push Bitcoin above $ 110,000. Thompson said he hopes the Fed will cut anywhere between 25 and 75 basis points in 2025, but these cuts will be spread in the second half of the year.

“I think more coordination is going on between Treasury and Fed than people want to believe,” Thompson said. “People think Trump and (Fed Chair) Powell will be bickering, but they are really kind of the same team today.

When will it be under?

In these headwinds working against risk assets such as stocks and bitcoins, the crypto sector is unlikely to have a good year, Thompson said. The fact that the White House does not seem to be too concerned about a potential retreat is also a strong signal, he said.

“The bessent will come by saying, ‘We need to correct the ship.’ And the shipping of the ship means cutting the juice that activates the crazy asset prices.

But how long does Trump probably have to maintain the course? Until it was too painful and even Trump’s political base tells him to cut it off, or until the beginning of 2026 – you can’t push a country to a backterm election.

“I’m comparing it to a controlled burn. They try to clear the brush so that it doesn’t become a bigger problem. But sometimes regulating burns becomes a forest fire,” Thompson said. “I think it will be a long slog type by year as they try to implement these policies.”