Bitcoin’s Decline May Be Just Beginning, Warns Lekker Capital’s Quinn Thompson
Bitcoin’s correction could be in the early stages, with the entire crypto sector possibly entering a downtrend similar to 2022. Quinn Thompson, the founder of crypto hedge fund Lekker Capital, suggested that Bitcoin could dip below $60K by year-end, reflecting a significant decline from its current price of $83,000 and nearly 50% off its recent peak of over $109,000.
Thompson told CoinDesk, “I could see us going back to a five-handle by the end of the year,” referring to a price range between $50,000 and $59,999. While he doesn’t expect a rapid drop, Thompson noted that the market could experience a slow, painful decline, catching many off guard. “It’s not about big crashes or liquidations—it’s a gradual grind down, and that’s what makes it more unbearable for investors wondering if the bottom is truly in,” he added.
Thompson, who has been bearish on the market for some time, has also criticized the White House’s crypto-related initiatives, calling them “nothingburgers” and “sell the news” events. He also believes that companies like MicroStrategy (MSTR), with their ongoing Bitcoin purchases, may not be as bullish for Bitcoin’s long-term prospects as many assume, since they are some of the few active buyers in the market.
The Four Key Economic Headwinds
Central to Thompson’s bearish thesis are several economic factors, primarily related to the policies of the Trump administration. He believes these factors will negatively impact the economy and the markets in the coming months.
- Government Efficiency Cuts (D.O.G.E.): Thompson argues that the Department of Government Efficiency (D.O.G.E.), which aims to reduce government spending to lower the U.S. deficit, will hurt the economy. D.O.G.E.’s focus on cutting spending—particularly in areas that have historically supported job growth—could lead to lower consumer spending, reducing economic growth. While the ultimate success of D.O.G.E.’s goals remains uncertain, Thompson anticipates its effects to be felt in the near future.
- Immigration and Labor Market Impact: The Trump administration’s stricter immigration policies and increased deportations could tighten the labor market. Migration has been a growth driver as it exerts pressure on wages. A reduced labor pool could lead to higher wages, potentially hurting businesses that are unable to absorb these increased costs.
- Tariffs and Economic Uncertainty: With tariffs being frequently adjusted or threatened by the Trump administration, businesses face increasing uncertainty. Thompson believes this will lead to delays in investments and hiring, as companies may wait for tariff-related decisions to stabilize before making major financial commitments.
- Federal Reserve Policies: The Federal Reserve’s approach to interest rates is also a critical concern. While it reduced rates by 1% in late 2024 to 4.25%-4.5%, this wasn’t enough to push Bitcoin past $110,000. Thompson expects the Fed to implement additional rate cuts between 25 and 75 basis points in 2025, but likely spread out in the second half of the year. He believes that there’s more coordination between the Treasury and the Fed than people realize, with both parties working toward slowing down inflation and reducing growth to bring down asset prices.
Will Bitcoin Bottom Out Soon?
Thompson emphasized that, given the challenges facing risk-on assets like Bitcoin, the crypto sector is likely to struggle throughout 2025. The current indifference from the White House regarding a potential recession is another red flag. “The administration is focused on reining in growth, which directly impacts asset prices, including stocks and crypto,” Thompson said.
He also speculated that the Trump administration could maintain its current course until it becomes too painful or until early 2026, especially as midterm elections approach. “I see this as a controlled burn,” he said. “They’re trying to clear the brush now to prevent a bigger problem later, but sometimes those burns turn into wildfires. It’s going to be a tough slog for the markets as they enact these policies throughout the year.”
