Why The Analyst Who Called Crypto's Crash Is Still Cautious

Crypto analyst Sean Farrell saw the crypto selloff coming. And now, with Bitcoin bouncing back, the Head of Digital Asset Strategy at Fundstrat still isn't ready to sound the all-clear just yet.

Coming into 2025, Farrell was vocal about the risks facing crypto. Stretched positioning, tight spreads, crowded risk trades, uncertain flows, ETF products trading at or below NAV — the setup just wasn't clean.

He described miners "selling hand over fist" and noted that the fiscal and monetary tailwinds many bulls were counting on simply weren't going to materialize in the near term.

"The risk-reward was just tough for crypto in the first half," Farrell told Coinage in a new interview. "My view was that that dip was to rent, not to own."

Even as Bitcoin tops $75,000 for the first time in six weeks — Farrell is cautious of the risks to the broader market even as crypto finds its footing.

Broader equity markets don't look like they've truly capitulated. Cash allocations were at all-time lows as recently as January and February, and major indices remain, in his words, "sanguine" from a pricing perspective. Add in geopolitical risk, oil nearing $100, and deteriorating credit conditions — and the picture gets murkier.

"I struggle to say that we've seen any kind of capitulation in risk markets," he said.

He's also watching the Fed closely. With rate cut expectations essentially priced out of the curve for the year, "I struggle to see a world in which a Powell that's exiting a divided Fed comes out and is overtly super supportive in the near term," he said.

On Wednesday, the Fed delivers its latest dot plot. If the Summary of Economic Projections prices rate cuts deeper into 2027, Farrell warned that "could perhaps have a bit of a deleterious effect on asset prices." On top of that, one under-discussed risk Farrell flagged is what happens when Strategy's Bitcoin buying slows down.

"Once that spigot is turned off," Farrell said, "it's revealed that the bid perhaps from an aggregate perspective was not quite as strong."

But not everything in Farrell's view is so defensive. He remains notably bullish on Hyperliquid and its HYPE token.

In just the first 15 days of March, HyperEVM (HIP-3) markets logged $28 billion in volume, driven in large part by traders using the protocol's permissionless perpetual futures markets to trade TradFi assets — oil, precious metals, equities — on weekends when traditional markets are closed. Because those revenues come from assets outside of crypto, HYPE has started to decouple from Bitcoin in a way most crypto assets don't.

Farrell said the 90-day correlation between HYPE and Bitcoin sat around 0.4 as of last week — significant in a space where cross-asset correlations typically run close to 1. All of that is backed into why he has such a high price target on HYPE at $100. It was trading around $40 after rallying over the last few weeks to bring its year-to-date gains to nearly 70%.

As for what would change his broader cautious stance, Farrell was specific: some form of capitulation in broader markets, geopolitical risk premiums rolling off, rate cut expectations getting priced back in, credit recovering, and institutional flows returning — with CME open interest and basis both rising.

Until then, his advice is simple: "It's wise to raise some dry powder on the strength."

His end-of-year Bitcoin target of $115,000 remains intact for now.

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