Analyst Who Predicted The Bitcoin Crash On Calling a Bottom

At the beginning of the year, Fundstrat’s Sean Farrell issued a rare warning that Bitcoin could fall 25%.

Weeks later, it all played out in spectacular fashion as Bitcoin notched its largest wipeout ever as measured in dollar terms. Now, as Bitcoin finds its footing, Farrell joined Coinage to discuss how he’s assessing risk and reward through the bottoming process.

“Regardless of if you have a time frame beyond six or 12 months, I do think that these are great areas to get involved,” the Head of Digital Asset Strategy at Fundstrat told Coinage. “I still think once we find a durable low and once that hot ball of money finds its way back to crypto, I think the recovery will be quite swift.”

Farrell reiterated his $115,000 year-end price target for Bitcoin, and once again echoed his views from the beginning of the year that Ethereum may be the better bet given rising tokenization trends.

However, at the same time, Farrell was cautious in going as far as calling an outright bottom given the speed at which prices deteriorated. His original call was that Bitcoin’s drop to $60,000 might play out near the end of the first quarter.

“The pace at which we reach these lows … I think it's going to be important to watch that relative performance of crypto relative to equities to gain confidence over us having actually put in a durable low,” he said. “Just speaking to my thought process of whether this is the bottom, … it is important to remember that crypto does generally clear risk before other risk assets since it is further out the risk curve.”

Other crypto investors who had similarly sounded the alarm are hesitant to believe the worst is over yet. XASH co-founder Vinny Lingham told Coinage that the overhang with Strategy’s Bitcoin holdings now being below profit could dampen a recovery. After the collapse, the company is sitting on about $7 billion in paper losses. 

“I don't think that we've seen the end of the pain,” Lingham said, highlighting added concern with institutional lending platform BlockFills recently announcing it was halting withdrawals and restricting trading. Lingham warned that a similar backdrop and echoes of the liquidity problems ahead of the FTX collapse could once again play out.

“FTX didn't just go down immediately,” he said. “Something broke in the plumbing of crypto … so do I think Bitcoin's bottomed? Absolutely not.”

Farrell isn’t as down on any of those overhangs, including any doomsday predictions about Strategy triggering a collapse to $0. Noting that Strategy’s mNAV has compressed, Farrell even mentioned why allocating to Strategy stock could be an additional way for investors to gain exposure to a Bitcoin recovery.

“That is another area that is giving me confidence … the Financial Times publishing articles talking about how 100 years from now Bitcoin is not going to be a thing,” he joked. “So maybe we need a few more of those articles, but that is a great sign.”

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