Bitcoin's Future in Jeopardy: Expert Predicts Plunge Below $60K

Economic Policies and Their Impact

Thompson’s bearish outlook on Bitcoin is closely tied to the economic policies implemented by the Trump administration, which he argues will weigh heavily on market sentiment. The Department of Government Efficiency (D.O.G.E.) is set to cut government spending significantly in a bid to reduce the federal deficit, which could stifle job growth and consumer spending.

“People get caught up in the politics of it,” Thompson stated, emphasizing that even the mere act of cutting government spending can have detrimental effects on the economy. As disposable income shrinks, so too does the potential for economic growth, creating a ripple effect that could lead to a sluggish market for Bitcoin and other risk assets.

Immigration Policies and Labor Market Effects

Adding to the economic challenges, Thompson points to the renewed focus on immigration policies that could disrupt the labor market. A decline in available workers could lead to wage inflation, further complicating the economic landscape. "Migration is growth positive because it puts pressure on wages," he explains, highlighting how reduced labor supply can create a paradox for businesses that may struggle to maintain profitability amidst rising labor costs.

The Uncertainty of Tariffs

Thompson also addresses the unpredictable nature of tariffs under the current administration. The constant back-and-forth on tariff announcements creates uncertainty for businesses, leading to delays in investment and hiring decisions. This uncertainty can have a chilling effect on market sentiment, making investors hesitant to put their money into riskier assets like Bitcoin.

The Federal Reserve's Stance

The Federal Reserve's cautious approach to monetary policy adds another layer of complexity to the situation. Despite a recent interest rate cut, Thompson believes that further cuts will be measured and slow, contributing to a prolonged period of economic stagnation. “I think there’s a lot more coordination going on between the Treasury and the Fed than people want to believe,” he noted, suggesting that the administration’s policies are intentionally designed to manage inflation and stabilize the economy.