136-year-old investment firm predicts next Bitcoin crash

Market Overview - The crypto market is currently experiencing significant turmoil, with Bitcoin down nearly 47% from its October peak, trading around $66,900, and the Crypto Fear and Greed Index at a score of 9, indicating "Extreme Fear" [1] Federal Reserve Influence - Analysts at Stifel attribute Bitcoin's current weakness to the Federal Reserve's hawkish stance, suggesting that a "hawkish cut" in December indicates a more cautious, data-dependent monetary policy approach [2][3] - The Fed has maintained steady interest rates in 2026, raising concerns about tightening liquidity, with FOMC members rejecting the notion of an "inflationary boom" amid trade tensions and tariff uncertainties [4] Historical Context - The rhetoric from Stifel analysts parallels Chair Jerome Powell's 2022 speech, which warned of impending pain as policymakers aimed to control inflation, with market reactions following the nomination of Kevin Warsh, an inflation hawk, as a signal for sustained higher rates [5] Structural Changes in Bitcoin's Performance - Stifel highlights a structural shift where Bitcoin has not benefited from a weaker dollar over the past year, diverging from its historical performance patterns, attributed to the impacts of Trump's trade war and changing inflation expectations [6] - Despite an expansion in global dollar liquidity, Bitcoin has not responded positively, undermining its status as a hedge against fiat debasement [7] Divergence from Equities - Bitcoin's decline occurs while the Nasdaq 100 Index remains near record highs, creating a widening gap between digital assets and equities, which Stifel describes as "ominous," suggesting potential turbulence for tech investors ahead [8]