Market Outlook and Potential Drawdowns
Bitcoin could still experience 50% drawdowns despite increased institutional participation, according to BitMine chair Tom Lee. The analyst pointed to equity market patterns as evidence that significant corrections remain possible for the digital asset.
Lee discussed the projection during an interview with crypto entrepreneur Anthony Pompliano published Thursday. He noted that Bitcoin continues to track stock market movements while amplifying their scale.
The S&P 500 has experienced multiple 25% declines over the past six years despite overall positive performance. Lee suggested that a 20% equity market decline could translate to a 40% drop in Bitcoin prices based on historical correlation patterns.
Recent market participants have argued that spot ETFs and institutional interest will reduce Bitcoin volatility going forward. Lee countered this view by emphasizing the asset's continued relationship with traditional equity markets.
Price Targets and Cycle Analysis
The analyst maintains his year-end price target of $200,000 to $250,000 for Bitcoin, which he reiterated on the Bankless podcast earlier this month. A 50% correction from that level would bring prices to approximately $125,000, near current all-time highs.
Lee observed that Bitcoin has moved beyond its typical four-year cycle, which would have indicated an October peak. He believes a longer cycle pattern is now developing for the asset.
Historical Comparisons and Contrasting Views
Veteran trader Peter Brandt recently drew comparisons between Bitcoin's current chart pattern and the soybean market's structure in the 1970s before a 50% collapse. Historical data shows Bitcoin fell from $69,000 in November 2021 to around $35,000 by late January 2022.
Strategy chairman Michael Saylor offered a contrasting view in June, stating that severe downturns will not return. If Bitcoin has already peaked at its current price of $109,981, a 50% decline would bring it to approximately $54,990, last seen in September 2024.