Bitcoin Could Face 50% Drawdown, Warns BitMine Chair

Background to Tom Lee’s Bitcoin Volatility Warning

Bitcoin could face a drawdown as steep as 50%, said BitMine chair Tom Lee in an interview published Thursday with crypto entrepreneur Anthony Pompliano. Lee stated, “I’m sure there will be 50% drawdowns,” highlighting that Bitcoin has not moved past its historical volatility. His comments come as some market observers argue that Bitcoin’s integration into mainstream finance — including the launch of spot Bitcoin ETFs and rising institutional participation — has made the digital asset more stable.

Contents

Despite these changes in market structure, Lee maintained that Bitcoin (BTC) continues to track equity markets closely and can exaggerate their fluctuations. “The stock market has more frequent 25% drawdowns,” Lee said, noting, “If the S&P is down 20, Bitcoin could be down 40.” He observed that, although U.S. equities have made progress over recent years, they have also seen multiple sharp corrections, a tendency that Bitcoin is prone to amplify.

Market Reaction and Analyst Perspectives

Lee’s comments align with a segment of analysts who are cautious about Bitcoin’s resilience to large corrections, even as its price reaches new highs. Veteran trader Peter Brandt recently suggested that Bitcoin’s current chart pattern resembles the soybean market in the 1970s, before it experienced a 50% drop. In the past, such declines for Bitcoin have played out rapidly; after reaching an all-time high of $69,000 in November 2021, BTC lost roughly half its value, falling to $35,000 within three months by late January 2022.

According to Lee, Bitcoin may have exited its typical four-year price cycle, which would have previously predicted a peak in October. Instead, Lee now anticipates a “longer cycle” underway. Despite his warning of potential drawdowns, Lee reiterated — during a recent Bankless podcast appearance — his prediction that Bitcoin’s price could rise to $200,000 to $250,000 by year-end.

Bitcoin is up 2.30% over the past seven days.

A correction of 50% from such levels would bring Bitcoin’s price back to around $125,000, which is in line with its all-time high as of June 2024. Conversely, if Bitcoin’s current price of $109,981 represents this cycle’s peak, a 50% decrease would return it to $54,990, levels not seen since September 2024, based on data from CoinMarketCap.

Future Outlook for Bitcoin Volatility

While some analysts anticipate more stability from growing institutional interest, Lee’s position suggests that Bitcoin could continue to experience sizable price swings. This diverges from more optimistic views such as that of MicroStrategy chairman Michael Saylor, who said in June, “Winter is not coming back,” implying reduced downside risk in coming cycles.

Despite new investment products and increasing Wall Street presence, the history of rapid Bitcoin corrections underscores ongoing risks for investors. Analysts and industry figures remain divided on whether the market’s adoption will significantly temper volatility or if traders should brace for the possibility that Bitcoin could face a 50% drawdown again.

For ongoing analysis of digital asset price movements and market risks, see the Cryptocurrency news section on Vizi.com.