Bitcoin May Have One More Drop Before the Next Bull Run: Fundstrat

Bitcoin bottoms rarely arrive with a bell. More often, they arrive after everyone gets bored.

That may be roughly where crypto investors find themselves today. Bitcoin has spent weeks chopping around after a brutal drawdown, some of the biggest risks hanging over the market have begun to fade, and signs of a longer-term bottom are starting to stack up.

But Fundstrat Head of Digital Asset Strategy Sean Farrell still thinks there may be one more "sharp move" lower first.

“My base case is still we have another leg lower,” Farrell told Coinage in a new interview. “I’m a bit less pessimistic on the degree to which we move lower.”

Farrell described recent trading as something closer to “end-of-cycle apathy” than outright panic — a market where investors have largely stopped caring enough to sell aggressively, but where the catalyst for another sustained bull run has yet to arrive. As Coinage highlighted last week with Fairlead Strategies founder Katie Stockton, Bitcoin's implied volatility has now reached cycle lows.

“Oftentimes you can see big moves after long periods of apathy,” Farrell said. “Given the balance of risks, I do think we see another sharp move lower.”

Whether that means Bitcoin breaks materially below its recent lows or simply retests them remains unclear. But Farrell’s hesitation has less to do with another crypto-specific blowup and more to do with macro market conditions.

Earlier in the downturn, one of the market’s biggest fears centered on Strategy and the complicated financing machine Michael Saylor built around the world’s largest corporate Bitcoin treasury. Falling Bitcoin prices had begun pressuring Strategy’s preferred securities, while questions mounted over how comfortably the company could fund its dividend obligations. Farrell was among those warning about those risks earlier this year.

Now, he thinks much of that immediate threat has passed.

“We’ve seen Strategy start to do the right things,” Farrell said, pointing to recent capital raises and efforts to rebuild the company’s dollar reserves. “They’ve really done a good job of repairing their balance sheet.”

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The problem is that most investor money outside of Strategy still has better places to go.

That may be the simplest explanation for one of the strangest divergences of 2026: Stocks have pushed toward new highs while Bitcoin and much of crypto have struggled to regain momentum. Farrell argues the answer lies in what has actually powered the equity rally.

During the last major liquidity-driven bull market, extraordinary monetary and fiscal stimulus flooded financial markets with capital. In that world, Bitcoin worked exactly as advertised: a scarce asset positioned as a hedge against monetary debasement and an unusually effective sponge for excess liquidity.

This time has been different.

“We’ve seen that dynamic shift over the past 12 months where earnings growth has outpaced liquidity growth,” Farrell said. “And that’s really what is driving risk assets.” If the biggest technology companies are delivering enormous earnings growth, marginal investment dollars have little reason to leave them for Bitcoin.

“Frankly, in that environment, that’s where they should go,” Farrell said.

That is not necessarily a permanent problem for Bitcoin. But it helps explain why an economy strong enough to send stocks higher has not automatically translated into another crypto boom.

And ironically, the same force powering equities today could help create Bitcoin’s next opportunity.

The AI boom is extraordinarily capital intensive. Farrell noted estimates suggesting another roughly $250 billion in spending may still be required to support the next phase of AI infrastructure development. Much of that expansion will need to be financed with debt.

That becomes harder as long-term interest rates rise.

“As the long end sells off, that makes that cost of capital quite expensive,” Farrell said.

The effect is already showing up in some of the companies sitting directly at the intersection of crypto and AI. Bitcoin miners that pivoted their power access and data centers toward high-performance computing have been hit particularly hard as investors reconsider the economics of financing massive new buildouts with yields elevated.

Farrell thinks that pressure could build further into year-end. And that is where the Bitcoin bull case gets interesting. If rising yields begin causing enough stress across financial markets, policymakers could eventually respond with easier monetary conditions or other measures designed to improve liquidity.

Farrell pointed to possibilities including more accommodative monetary policy or changes in Treasury issuance that could ease pressure on longer-term rates. If liquidity growth begins outpacing earnings growth again, suddenly Bitcoin has a reason to work.

Farrell believes such a shift could happen over the next three to six months.

“We are showing signs of that bottoming process starting,” Farrell said. “And I do think that it is time to, if you have checked out, to check back in and start paying attention, locking in and getting ready for the broader market to turn.”

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