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Global wealth management company Stifel has warned that the price of Bitcoin, one of the world's leading cryptocurrencies, could nose-dive due to a combination of tightening liquidity, regulatory gridlock, and relentless ETF outflows.
The world's largest cryptocurrency might plunge all the way back to $38,000, the investment firm predicts.
Earlier today, Bitcoin collapsed to yet another 2025 low of $72,185.
The ugly bear case
In a new research note released Wednesday, the firm warned that Bitcoin is at risk of a further 47% collapse, a move that would drag the asset down to $38,000.
Stifel argues that the current market structure mirrors the most brutal phases of past crypto winters.
A less accommodative Fed policy is the first major headwind identified by Stifel.
Despite market hopes for aggressive rate cuts, the Federal Reserve has maintained a tighter stance to combat lingering inflation.
High rates continue to drain liquidity from speculative risk assets, which leaves Bitcoin rather vulnerable.
The cryptocurrency boom promised by the current administration has seemingly hit a legislative wall. The pace of pro-crypto regulation in the U.S. has slowed significantly.
In the meantime, liquidity continues to shrink. This, of course, does not bode well for risk assets of the likes of Bitcoin.
Finally, the spot Bitcoin ETFs, which were mainly responsible for the latest bull run, have turned into a source of sell pressure.
That said, analyst Eric Balchunas has argued that ETF investors are actually holding the line, while the long-time crypto natives are the ones dumping.
Despite Bitcoin suffering a "nasty 40% downturn", only 6% of the assets held in Spot Bitcoin ETFs have been withdrawn.
This is shockingly low churn for such a volatile asset. It means 94% of the institutional capital that entered the market via ETFs (BlackRock, Fidelity, etc.) has remained untouched.
Alex Dovbnya
Dan Burgin