Bitcoin, a 30% drop 'shock' is coming within 2 years..."Similar to Dot-com Bust and Financial Crisis"

▲ Bitcoin (BTC)/AI generated image

As U.S. inflation rears its head again, a warning has emerged that the risk asset market, including Bitcoin (BTC), could be exposed to an average 30% decline shock within the next 1 to 24 months.

According to Bitcoin.com on May 20 (local time), crypto investment firm Capriole Investments warned that current levels of inflation have repeatedly preceded major market downturns in the past. Capriole Investments analyzed that in all historical cases where inflation rose to its current level, the broader market subsequently fell by an average of 30% over 1 to 24 months.

Among the past cases presented by Capriole Investments, the most extreme periods were the 2000 dot-com bust and the 2008 financial crisis. During the dot-com bust, market value evaporated by 47% between 2000 and 2002, and during the 2008 financial crisis, the market fell by 55%. This analysis focuses on the current market entering a similar inflationary environment to those seen before past major collapses.

The U.S. Consumer Price Index (CPI) for April rose 0.6% month-over-month on a seasonally adjusted basis, with the annual inflation rate climbing to 3.8%. This is the highest figure since May 2023. Producer prices also show a high trend, creating an environment where the Federal Reserve finds it difficult to signal interest rate cuts. With the 30-year U.S. Treasury yield briefly hitting 5.19% the previous day and the stock market remaining near all-time highs, Capriole Investments believes the market is underestimating risk.

Bitcoin and the cryptocurrency market are also assessed to be difficult to escape from such macroeconomic shocks. Bitcoin was pressured for a significant period in 2026 amid inflation concerns and outflows from Bitcoin spot ETFs, falling below $80,000 multiple times. In February, it also recorded a cycle low near $60,000. While Capriole Investments' analysis does not directly suggest a specific Bitcoin price, it emphasizes that if traditional markets experience historical average declines, Bitcoin and altcoins will likely not be able to avoid the impact.

However, the key variables for this outlook are how long inflation will persist and whether the Federal Reserve can cut interest rates before a clear slowdown in growth. Capriole Investments explained that while the average 30% decline shows a central tendency, the range of actual outcomes is wide. In past cases where inflation did not quickly subside and remained above current levels for an extended period, the most severe market collapses occurred. Meanwhile, some cryptocurrency analysts also suggest that Bitcoin's February low near $60,000 could be the maximum decline in this downturn, and a moderate sideways movement between $60,000 and $75,000 is more likely in the short term.

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