Bitcoin may still face big price drops, even though many people believe it has become more stable because of support from the Wall Street and investors.
In an interview with crypto entrepreneur Anthony Pompliano that was published on Thursday, BitMine chair Tom Lee warned that the cryptocurrency is still very volatile and could lose up to 50% of its value under certain market conditions.
“There will be 50% drawdowns,” Lee said, stressing that while many now believe Bitcoin has become more stable because of spot Bitcoin ETFs and rising institutional participation, the digital asset still reacts sharply to broader market moves.
He noted that Bitcoin often mirrors the stock market’s performance but with amplified reactions, saying, “The stock market has more frequent 25% drawdowns. So if the S&P is down 20, Bitcoin could be down 40.”
Lee added that the S&P 500 has experienced a number of large declines over the past six years, and Bitcoin tends to follow similar patterns but with bigger swings. He also pointed out that Bitcoin might be entering a “longer cycle” that breaks away from its usual four-year pattern, which would have predicted a peak in October.
This shift, according to him, suggests that Bitcoin’s market rhythm may be changing as it matures and as new participants influence trading behavior.
Earlier last month, Lee said in an interview with CNBC, that he still expects Bitcoin to reach between $200,000 and $250,000 by the end of the year. However, he cautioned that a 50% pullback from those levels could take the price back to around $125,000, which is close to its current record high.
As at the time of writing, Bitcoin is trading for around $111,475. This is a 1.89% surge in the last 24 hours. Trading activity is down by 30% to $51 billion in trading volume, according to data from CoinMarketCap.
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