Analyst says Bitcoin (BTC) is mirroring the stock market, predicts 50% drawdown

Bitcoin price volatility remains front and center for investors, according to BitMine chair Tom Lee, who warned this week that BTC could still suffer drawdowns of up to 50% even as institutional interest and spot ETFs grow.

Lee’s view blends caution with conviction: while he sees a longer-term upside, he says sharp corrections will remain part of Bitcoin’s story.

Lee warns of steep corrections

Tom Lee, in a podcast interview with Anthony Pompliano, said that Bitcoin continues to move in step with traditional equities and often amplifies their swings.

He argued that if the stock market endures frequent 20–25% drawdowns, Bitcoin can double those losses.

In plain terms, a significant equity sell-off could translate to a 40% or larger slump for BTC.

Lee repeated a bullish long-term forecast even as he sounded the alarm about near-term risk.

He reiterated a target range of $200,000–$250,000 for this cycle, while also conceding that a severe retracement from such highs remains possible.

Technicals show indecision, a wedge pattern looms

Technical analysis paints a picture of expanding volatility on Bitcoin’s daily chart.

Analysts have highlighted a broadening wedge or megaphone pattern, where higher highs and lower lows have created a wide trading channel.

That formation often precedes large directional moves and signals market indecision.

Within that structure, short-term swings between roughly $104,000 and $115,000 have dominated action.

On-chain and derivatives metrics have reflected a conservative stance among traders.

On-chain data shows reduced leverage, falling open interest, and spiking demand for downside protection in options markets.

Short-term holder supply has risen, indicating more speculative participation despite the pullback.

Profitability indicators tell a mixed story, with the net unrealised profit and loss flipping negative for many wallets, while realised capitalisation continues to climb, suggesting long-term holders are still accumulating.

This split underlines a market where conviction sits with longer-term money, while short-term players de-risk.

Overall, maintaining support above $108,143 is seen as essential for a push toward near-term resistances at $114,790 and $117,355.

Some projections even point to a breakout above $180,722, with an extended rally to $221,485 possible if momentum returns.

However, failure to hold the support at $108,143 could open the door to a slide toward $106,202 or the lower wedge boundary near $100,000.

What this means for investors

Lee’s warning is a reminder that institutional adoption does not erase volatility.

Even if spot ETFs and corporate treasuries increase demand, Bitcoin’s correlation with equities can transmit outsized swings.

For investors, that means planning for both large rallies and deep, fast corrections.

Risk management becomes crucial: position sizing, stop rules, and hedging matter more when an asset can swing 40–50% alongside equity turmoil.

At the same time, the presence of long-term buyers and steady realised cap suggests that some market participants view dips as buying opportunities.