Bitcoins volatility is likely to remain high in the near term and prices could fall further as crypto markets grapple with a liquidity squeeze and deeply divided sentiment, according to Sygnum Bank chief investment officer Fabian Dori.
But the long-term picture, he argues, remains intact.
“We can see volatility remaining high in the near term, and prices may even go lower from here,” Dori told CoinDesk in an interview. “Sentiment has collapsed. Confidence and trust for investors to build exposure is very limited.”
The recent divergence between gold, which has held firm, and innovation assets such as Nasdaq tech stocks and bitcoin underscore how fragile the current environment has become. Still, Dori cautions against searching for a single explanation.
“There is no single cause, indicator or driver behind this gap,” he said. “It’s a number of elements that have been building up over the past few months.”
Crypto markets have trended lower in recent months, with bitcoin and other major tokens retreating from earlier highs as macro headwinds and choppy institutional flows weigh on sentiment. Sticky inflation and shifting expectations of interest rate cuts by the Federal Reserve have curbed risk appetite, while periodic geopolitical flare-ups have fueled a broader move out of speculative assets. At the same time, chopper exchange-traded fund (ETF) flows, thinner liquidity and bouts of leveraged liquidations have magnified downside moves, leaving prices struggling to regain momentum and repeatedly testing key support levels.
Thin ice
Crypto, Dori claims, has been “on thin ice” for some time.
Long-term owners have become wary of bitcoin’s four-year cycle and the risk of entering a correction phase. This caution has left the ecosystem more fractured, with fewer strong hands willing to absorb volatility.
Layered on top are crypto-specific liquidity stresses and broader macro pressures.
Since last June, the US Treasury’s issuance of bills and notes has significantly increased Treasury General Account (TGA) balances at the Federal Reserve. When these bills are issued, liquidity is effectively withdrawn from the markets and stagnates.
“They are non-productive assets,” Dori said. “And crypto, which is one of the most liquidity-sensitive asset classes, was among the most affected.”
A record high liquidity event on October 10 further dampened risk appetite among investors and market makers, he said, accelerating the deterioration of crypto market depth. Funding rates collapsed and liquidity conditions worsened.
At the same time, concerns ranging from bitcoin’s store-of-value narrative to quantum computing risks, forced sales of digital asset reserves and delays around US legislation, including the long-awaited Clarity Act, have added to the uncertainty.
With sentiment already fragile, even minor headlines now trigger large price swings.
“The ecosystem was already on thin ice because of the cycle dynamics,” Dori said. Then you add further liquidity constraints and collapsing sentiment, it’s a very vulnerable setup, he added.
Since early October, bitcoin has been exposed to moves of around 40% to 50% from recent highs. The last time markets saw declines of that magnitude was during the 2022 systemic crisis, prompting renewed fears of broader structural risk.
Dori rejects the comparison.
“From a macro perspective, regulatory clarity, institutional adoption and counterparty health, the picture today is quite different from 2022,” he said. “This is not the same systemic risk environment.”
Liquidity turn?
In Dori’s view, the current weakness reflects short-term liquidity pressures rather than a shift in fundamentals.
Market data, he said, shows empirical signs of improvement beneath the surface.
The US business cycle is expanding. ISM service activity has grown in recent months and manufacturing pressures have surprised to the upside, historically conditions for improving risk appetite.
At the same time, headline inflation remains above the Federal Reserve’s 2% target, but is nowhere near levels that have previously given rise to acute concerns about trade policy or tariffs. The trend, Dori said, appears subdued enough to allow the Fed to continue its rate-cutting cycle in the coming months.
“It would improve liquidity conditions again,” he said.
Treasury-driven liquidity pressures could also ease, setting the stage for a faster-than-expected turnaround ahead of the next Federal Open Market Committee meeting, Dori added.
From a crypto-native perspective, the fundamental background remains constructive. Stablecoin growth continues, integration into traditional finance expands, and the number of native tokens locked on networks like Ethereum and Solana remains robust.
Although institutional adoption is uneven, it is still progressing.
“As sentiment normalizes and liquidity conditions improve, the gap between traditional assets and crypto should narrow again,” Dori said.
Looking for a trigger
For now, however, the mood is the dominant force.
Fear-and-greed indicators sit at extreme levels of fear, underscoring how little appetite there is to rebuild exposure. “It clearly indicates that trust and confidence is very limited,” Dori said. “We need some kind of trigger.”
What that catalyst might be is less clear.
The passage of comprehensive US crypto legislation, such as the Clarity Act, would be “an extremely positive development,” he said. A normalization of geopolitical tensions could also help restore broader investor appetite.
Improving concerns linked to artificial intelligence and sustainability narratives may provide further tailwinds. Meanwhile, a further recovery in liquidity conditions, combined with continued institutional approaches, will reinforce the constructive case.
Until then, the markets remain exposed.
The short-term view, because of the feeling, is not great, Dori said. But he remains convinced that the structural basis is stronger than it appears.
“Fundamentally, we’re seeing improved cyclical data, stablecoin growth, institutional participation and stronger counterparty risk management,” he said. “It’s very different from what we saw in 2022.”
In Doris’ estimation, bitcoin’s current slump is less a judgment on its long-term viability and more a function of liquidity mechanics and shaken confidence.
Volatility may intensify before it subsides. Prices may even test lower levels. But if liquidity conditions ease and macro data continues to be firm, Dori believes the turnaround could come sooner than many expect.
For now, crypto is still on the edge. But beneath the surface, he claims, the fundamentals are getting better.
Read more: Bitcoin is stuck in a rut, but JPMorgan says new legislation could be the ultimate spark
