BTC long-term bull case remains, says Fabian Dori

Bitcoin’s BTC$67,418.96 volatility is likely to remain elevated in the near term, and prices could fall further, as crypto markets grapple with a liquidity squeeze and deeply fractured sentiment, according to Sygnum Bank chief investment officer Fabian Dori.

But the longer-term picture, he argues, remains intact.

“We can see volatility remaining high in the short term, and prices could even go lower from here,” Dori told CoinDesk in an interview. “Sentiment has collapsed. Trust and confidence for investors to build exposure are very limited.”

The recent divergence between gold, which has held firm, and innovation assets such as Nasdaq tech stocks and bitcoin underscores how fragile the current environment has become. Yet Dori cautions against searching for a single explanation.

“There isn’t one single cause, indicator or driver behind this gap,” he said. “It’s a number of elements that have been building over recent months.”

Crypto markets have trended lower in recent months, with bitcoin and other major tokens retreating from earlier highs as macro headwinds and uneven institutional flows weigh on sentiment. Sticky inflation and shifting expectations for Federal Reserve rate cuts have curbed risk appetite, while periodic geopolitical flare-ups have reinforced a broader move out of speculative assets. At the same time, choppier 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 argues, has been “on thin ice” for some time.

Long-term holders have grown wary of bitcoin’s four-year cycle and the risk of entering a correction phase. That caution has left the ecosystem on more fractured footing, with fewer strong hands willing to absorb volatility.

Layered on top are crypto-specific liquidity stresses and broader macro pressures.

Since June last year, the U.S. Treasury’s issuance of bills and notes has significantly increased balances in the Treasury General Account (TGA) at the Federal Reserve. When those bills are issued, liquidity is effectively pulled from markets and sits idle.

“They are non-productive assets,” Dori said. “And crypto, being one of the most liquidity-sensitive asset classes, was among the most affected.”

A record liquidity event on Oct. 10 further dampened risk appetite among investors and market makers, he said, accelerating the deterioration in 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 selling of reserves by digital asset treasuries and delays around U.S. legislation, including the much-anticipated Clarity Act, have compounded uncertainty.

With sentiment already fragile, even minor headlines now trigger outsized price swings.

“The ecosystem was already on thin ice because of the cycle dynamics,” Dori said. Then you add additional liquidity constraints and collapsing sentiment, that’s a very vulnerable setup, he added.

Since early October, bitcoin has suffered drawdowns of roughly 40% to 50% from its recent highs. The last time markets experienced declines of that magnitude was during the systemic crisis of 2022, prompting renewed fears of broader structural risk.

Dori rejects the comparison.

“From a macro perspective, regulatory clarity, institutional adoption and counterparty soundness, the picture today is totally different from 2022,” he said. “This is not the same systemic risk environment.”

Liquidity turn?

In Dori’s view, the current weakness reflects a short-term liquidity squeeze rather than a shift in fundamentals.

Market data, he said, shows empirical signs of improvement beneath the surface.

The U.S. business cycle is broadening. ISM services activity has expanded in recent months, and manufacturing prints have surprised to the upside, historically prerequisites for improving risk appetite.

At the same time, headline inflation remains above the Federal Reserve’s 2% target but is nowhere near levels that previously fueled acute concerns around trade policy or tariffs. The trend, Dori said, appears subdued enough to allow the Fed to continue its rate-cut cycle in coming months.

“That would improve liquidity conditions again,” he said.

Treasury-driven liquidity pressures could also ease, setting the stage for a faster-than-expected turn ahead of the next Federal Open Market Committee meeting, Dori added.

From a crypto-native perspective, the fundamental backdrop remains constructive. Stablecoin growth continues, integration into traditional finance is expanding, and the number of native tokens locked on networks such as Ethereum and Solana remains robust.

Institutional adoption, while uneven, is still progressing.

“Once sentiment normalizes and liquidity conditions improve, the gap between traditional assets and crypto should narrow again,” Dori said.

Searching for a trigger

For now, however, sentiment is the dominant force.

Fear-and-greed indicators sit at extreme fear levels, underscoring how little appetite there is to rebuild exposure. “That clearly indicates that trust and confidence are very limited,” Dori said. “We need some kind of trigger.”

What that catalyst might be is less clear.

The passage of comprehensive U.S. 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.

Improvement in concerns tied to artificial intelligence and sustainability narratives could provide additional tailwinds. Meanwhile, a further recovery in liquidity conditions, combined with continued institutional inflows, would reinforce the constructive case.

Until then, markets remain exposed.

The short-term view, because of sentiment, is not great, Dori said. But he remains confident that the structural foundation is stronger than it appears.

“Fundamentally, we see improving business cycle data, stablecoin growth, institutional participation and stronger counterparty risk management,” he said. “That’s very different from what we saw in 2022.”

In Dori’s assessment, bitcoin’s current slump is less a verdict 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. Yet if liquidity conditions ease and macro data continue to firm, Dori believes the turn could come sooner than many expect.

For now, crypto remains on edge. But beneath the surface, he argues, the fundamentals are quietly improving.

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