The analysts cited the extent to which Bitcoin has fallen from its all-time highs amid previous “super-bears” in 2011 (93%), 2014 (84%), 2018 (83%), and 2022 (76%). Based on the ascending nature of those lows, the analysts penciled in a 70% drawdown this time around, while acknowledging that this represents their potential worst-case scenario.
If voting members of the Federal Open Markets Committee signal that they have no interest in enabling an “inflationary boom” amid an economic outlook clouded by tariffs—regardless of the central bank’s chair—then that could mark the bottom for Bitcoin, the analysts posited.
The analysts observed a structural shift in Bitcoin’s performance, noting that it hasn’t benefited from a weaker dollar over the past year. They attributed that development to President Donald Trump’s trade war and the impact of economic growth on inflation expectations.
Bitcoin, meanwhile, hasn’t ticked up alongside an increase in global dollar-denominated liquidity, despite rallying when that was the case in previous years. When combined, that creates the perception that Bitcoin is no longer a hedge against fiat money, the analysts assessed.
The prospect of higher inflation has also weighed on tech stocks, along with signs of credit stress stemming from massive investments in artificial intelligence, the analysts wrote. That has dragged down Bitcoin, which tends to be correlated to tech stocks, they added.
With Bitcoin falling as tech stocks waver close to all-time highs, Stifel suggested that the outlook could also be foreboding for tech equities. They described a gap between Bitcoin and the Nasdaq 100 Index that’s been widening since October as “ominous.”
