Bitcoin (BTC) is facing a major downside risk that could push prices below the previous bear market low, according to a new analysis from blockchain data firm CryptoQuant.
The company warns that a confluence of geopolitical shocks, macroeconomic repricing and positioning of fragile derivatives could push the largest cryptocurrency to a bottom near $10,000 in a worst-case scenario – well below the last bear market low of almost $15,000.
Political shock from Trump speech
CryptoQuant’s comment comes against the backdrop of a substantial pullback from Bitcoin’s record highs. After peaking at around $126,000 last October, Bitcoin has recovered about 45% and entered a months-long consolidation range between $66,000 and $70,000.
The company highlights recent political developments as a direct catalyst for the downside potential. CryptoQuant points to President Donald Trump’s April 1 speech on Iran as a market-moving event that abruptly raised expectations to a new level.
By pointing to the possibility of intensified military action in the coming weeks, the speech undermined hopes for de-escalation and prompted a broad risk response.
According to CryptoQuant, this wasn’t just a geopolitical scare; it forced a repricing of the macro conditions that matter to the risk of assets like Bitcoin.
As oil prices rise, inflationary pressures may return; a stronger dollar tightens dollar liquidity worldwide. CryptoQuant is seeing increasing volatility – with a VIX near 25 – and wider spreads on government bonds, both of which are symptomatic of deteriorating liquidity.
Three possible Bitcoin outcomes
CryptoQuant outlines a range of possible outcomes. Under a moderate stress situation, the company estimates that Bitcoin could fall from $70,000 to roughly $50,000 – a drop of 25 to 30%.
If Bitcoin Exchange Traded Funds (ETFs) outflows continue and spot market demand remains weak, the medium-term downside trend will increase significantly, with prices potentially sliding towards $30,000-$20,000, representing a 60-70% decline from current levels.
In the extreme scenario – for example a prolonged closure of the Strait of Hormuz or an ongoing major conflict – global liquidity could become more completely sequestered.
CryptoQuant suggests that under such conditions, stock prices could fall by more than 30% and oil prices could rise to $150-$200 per barrel, conditions that could push Bitcoin towards the $10,000 mark, an 85% drop from current trading prices.
Featured image from OpenArt, chart from TradingView.com