Bitcoin’s Bearish Trend Could Continue Into 2025, Warns Lekker Capital’s Quinn Thompson
Quinn Thompson, the founder of crypto hedge fund Lekker Capital, has expressed concerns about Bitcoin’s price trajectory, suggesting the cryptocurrency could face a prolonged downturn in 2025, with the potential for a significant drop to between $50,000 and $59,999. This would mark a sharp fall from Bitcoin’s recent peak of over $109,000 just two months ago.
In an interview with CoinDesk, Thompson explained that while Bitcoin’s price correction may seem like it’s already underway, the worst may still be ahead. “I foresee a potential drop back into the $50,000s by the end of the year. It might not happen overnight, but this slow descent could be more painful and unsettling for investors than the sharp, volatile moves we’ve seen in the past,” Thompson said.
Thompson, who has consistently maintained a bearish stance, dismissed the bullish sentiment surrounding government crypto policies and institutional Bitcoin purchases, labeling them as short-term catalysts with limited long-term impact. He described recent government initiatives as “nothingburgers,” implying that they fail to provide substantial support for the market.
Challenges Loom for the U.S. Economy
Thompson’s bearish view on Bitcoin is also shaped by broader economic challenges he believes will weigh heavily on the markets in the coming months. He pointed to four key issues stemming from the current administration’s policies, particularly under Trump, which could dampen economic growth and investor sentiment.
- D.O.G.E. and Government Spending Cuts: One of the major factors Thompson believes will impact markets is the Department of Government Efficiency (D.O.G.E.), which is pushing to reduce government spending. Thompson noted that government expenditure has played a significant role in recent economic growth, particularly by supporting consumer spending. “Even if the cuts are not as drastic as promised, any reduction in government spending will be felt in the broader economy, especially in the coming months,” he said.
- Labor Market Pressures Due to Immigration Policies: The administration’s tightening of immigration laws could lead to a reduced labor force, pushing wages higher as businesses struggle to fill positions. “This could put pressure on businesses that rely on affordable labor, leading to inflationary pressures,” Thompson said. This disruption in the labor market could also slow economic growth and hurt business profitability.
- Tariff Uncertainty: Thompson also cited the Trump administration’s shifting stance on tariffs as another concern for the markets. “The constant back-and-forth on tariffs creates uncertainty for businesses, which may delay investments and hiring decisions. This kind of uncertainty is toxic for markets,” he explained.
- The Federal Reserve’s Cautious Stance: Thompson expects the Federal Reserve to remain cautious in its monetary policy, particularly as inflation data continues to be less than ideal. Although the Fed cut rates by 1% in late 2024, Thompson anticipates only modest rate reductions in 2025, which may not be enough to stimulate significant market growth. “The Fed will likely cut rates slowly, possibly by 25 to 75 basis points, but the effects of those cuts might not be felt until later in the year,” he said.
Bitcoin Faces Major Headwinds
Thompson’s analysis suggests that the macroeconomic environment will present significant challenges for Bitcoin and other risk assets. He noted that while the White House has shown little concern about the potential for a recession, the reality is that the economy is likely to face continued pressure. “With fiscal tightening underway, the impact will be lower asset prices, and Bitcoin won’t be immune to this,” he warned.
Thompson further compared the current policy environment to a “controlled burn” where the administration is purposefully attempting to slow down the economy to prevent a larger crisis in the future. However, he cautioned that these controlled efforts could easily spiral into bigger issues, including a more severe economic downturn.
“I believe 2025 will be a challenging year for Bitcoin and risk-on assets,” Thompson concluded. “The combination of economic policy shifts, regulatory uncertainty, and a tightening labor market could weigh heavily on the crypto market throughout the year. Bitcoin may struggle to maintain its recent levels, and we may see further price corrections before finding any stability.”
