Crypto sentiment has turned sharply bearish as macro fears spill into digital assets, dragging major tokens lower at a rapid pace. Bitcoin has slipped into the mid-$90,000 range and Ethereum has dropped below $3,000, reflecting a broader rush to cut risk as stocks fall and AI-linked bonds flash warning signs.
Yet with the U.S. government reopening and monetary conditions expected to ease, analysts say the backdrop for risk assets may soon improve. James E. Thorne explains why this moment could influence Bitcoin’s next major phase, breaking down the key forces now shaping the market.
Liquidity Is About to Return
According to Thorne, recent Treasury actions signal that fresh liquidity is about to flow back into the economy. He believes the era of aggressive quantitative tightening is nearing an end. He expects the Federal Reserve to continue cutting interest rates until they reach roughly 2.75 percent, a level that typically supports stronger market performance.
He also points to 2026 as a pivotal year, when Fed Chair Jerome Powell steps down and the FOMC undergoes leadership changes. Thorne sees this transition as the final step away from the current policy cycle. He notes that the Fed’s tightening has already pushed the U.S. housing market into recession, with high borrowing costs and tight credit slowing buyers, builders, and overall activity.
Bitcoin’s Growth Continues Despite Market Stress
Even as traditional markets struggle, Thorne says Bitcoin’s underlying growth remains intact. He highlights the U.S. push toward clearer crypto regulations, which is giving major institutions greater confidence to participate. With Bitcoin’s fixed supply and built-in scarcity, he argues it stands in sharp contrast to the unlimited creation of fiat money. This scarcity, he says, is what continues to attract Wall Street players and strengthen Bitcoin’s role in global finance.
Despite stronger fundamentals, Thorne notes that many investors still react emotionally — selling Bitcoin precisely when its long-term setup is improving. Panic, impatience, and confusion, he says, remain common. He emphasizes that bull markets do not end when liquidity is rising but when it disappears, and in his view, that point is still far off.
Crypto user LYGMA warns that the financial system is far more fragile than many realize. He argues that the U.S. can no longer “print its way out,” saying the Fed is simply moving debt from one place to another, much like paying off one credit card with another. He adds that ordinary Americans are already tapping into their 401(k)s to cover basic expenses, while AI stocks look dangerously overvalued and could crack under selling pressure.
If major equities collapse, he believes crypto would likely fall even harder.
Meanwhile, analyst David Levenson says Bitcoin won’t stabilize until its volatility declines further. He notes that Bitcoin has shown a long-term trend of shrinking volatility but suggests the market may still need to fall more before finding solid support.
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FAQs
Crypto sentiment is weak due to macro fears, falling stocks, and investors cutting risk, pushing Bitcoin and Ethereum sharply lower.
More liquidity and lower rates often boost risk assets, and analysts say Bitcoin could benefit as financial conditions ease.
Yes. Clearer U.S. regulations, institutional interest, and Bitcoin’s fixed supply continue to support its long-term growth story.
Analysts say Bitcoin stabilizes as volatility declines, meaning prices may need more time or correction before forming strong support.
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