Ari Paul, founder of cryptocurrency investment company BlockTower Capital, made a noteworthy assessment of the current market outlook. Paul stated that he sees two main scenarios as equally probable for the crypto market and has shaped his investment position accordingly.
According to Paul, in the first scenario, the recent peak seen for crypto assets could be the “final wave.” From this perspective, Bitcoin and crypto have now achieved global recognition; they have even been publicized by heads of state. The virtually limited regulatory pressure under the current administration also doesn’t present a significant obstacle to adoption.
Despite this, Paul argues that organic demand and adoption remain limited, suggesting that many countries, institutions, and companies have experimented with cryptocurrency but haven’t found it fully meets their needs in its current form. For example, El Salvador’s adoption of Bitcoin and subsequent withdrawal is cited as an example supporting this view.
Paul stated that in this scenario, cryptocurrencies could be in a similar phase to the internet sector in the year 2000. The internet didn’t disappear, but many companies from that era didn’t survive. The idea of “cryptocurrency” can be transformative and valuable; however, this doesn’t mean every protocol or token will survive. He also noted that despite the large liquidations occurring in the market, even larger liquidations could happen, and prices could fall to much lower levels.
In the second scenario, the current pullback is considered a correction in a higher timeframe. Paul argued that in the context of late-stage capitalism and “financial nihilism,” Bitcoin and cryptocurrencies could remain attractive for speculative capital. Within this framework, he stated that investors will continue to seek alternatives to fiat currency systems, increasing the use of projects developed in niche areas, and that a “turning point” could occur that will change the narrative at some point. He also added that cryptocurrency is still an area that could be the target of coordinated rises for wealthy and powerful companies.
According to Paul, there have been significant sell-offs recently, both in terms of leverage and market sentiment. However, the industry’s fundamental dynamics, infrastructure improvements, product building, and gradual recovery continue.
Ari Paul said that if both scenarios truly have a 50% probability, then a reasonable portfolio weighting in crypto might make sense due to the asymmetric upside potential.
Paul noted that middle-ground scenarios are also possible, for example, if large institutional players like MicroStrategy (MSTR) are liquidated, Bitcoin could fall to the $15,000–$40,000 range; however, new all-time highs (ATHs) could then be seen again with the strengthening of macroeconomic conditions and fundamental dynamics.
*This is not investment advice.