Wolfe Research Warns of Prolonged Downturn as Crypto Signals Turn Sharply Bearish

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Broader Risk-Off Backdrop Hits Digital Assets

Investing.com — Wolfe Research is warning that a deeper, more persistent downturn is taking shape across the cryptocurrency complex, with digital assets now moving in line with a broader risk reduction across markets.

In a Wednesday report titled “Winter is Coming,” Wolfe analyst Rob Ginsberg said that early signs of weakness in crypto have developed into a more entrenched decline as the year nears its end.

Technical Picture Turns Decisively Negative

Ginsberg highlighted widespread technical deterioration across leading tokens. He noted that many key cryptocurrencies are trading beneath important moving averages (MAs), with several hovering near or slipping below their 52-week lows.

What he finds particularly troubling is that markets have not yet reached oversold conditions, suggesting that sellers remain firmly in control of price action.

“Negative trends remain in place across the board,” he wrote, emphasizing that momentum indicators are not yet signaling any material relief.

Bitcoin and Ethereum Face Renewed Downside Tests

According to Ginsberg, Bitcoin has not escaped the broader technical damage. He observed that a recent rebound in BTC prices faded quickly, with selling interest reasserting itself.

The analyst expects Bitcoin to probe support near $75,000, calling this area his initial downside objective following the latest breakdown.

Ethereum is exhibiting a comparable pattern, Ginsberg noted. A recent recovery attempt was capped at the 50-day moving average, and prices have since rolled over again. He views a retest of short-term support in the vicinity of $2,600 as a likely development.

Relative Performance: Bitcoin vs. Altcoins

Relative performance dynamics across the crypto universe are also contributing to Wolfe’s cautious stance. Ginsberg pointed out that Bitcoin has recently held up better than most alternative tokens, with the firm’s Alt Coin Index returning to levels last seen in 2023.

He underscored an important behavioral pattern in prior cycles: “What’s interesting is that Bitcoin actually begins to underperform the rest of the space when things start to turn. It’s something we will watch out for to signal a potential bottom,” Ginsberg said.

For the moment, however, Wolfe anticipates that Bitcoin will continue to outperform the broader crypto space, accompanied by ongoing weakness in crypto-linked equities. “For now, though, we expect further BTC outperformance relative to the rest of the space, with continued pressure on crypto-related stocks as well. Looks like a ‘Crypto Winter’ is upon us,” he added.

Spillover to Equities and Cycle Considerations

Ginsberg argued that the malaise is no longer confined to digital assets. He said that equity markets have started to follow Bitcoin lower, noting that past episodes where stocks lagged after similar divergences were often followed by broader market drawdowns.

The analyst also referenced longer-horizon cycle analysis. He contended that the four-year crypto cycle “nailed the peak this time around” and suggested that this framework indicates the recent highs could remain intact for roughly the next two years.