Organized & Compiled: Deep Tide TechFlow

Guest: Sean Farrell, Head of Crypto Research at Fundstrat

Host: Zack Guzman

Podcast Source: Coinage

Original Title: Why The Analyst Who Called Crypto's Crash Is Still Cautious

Broadcast Date: March 18, 2026

Summary of Key Points

While many investors believe Bitcoin and other cryptocurrencies have hit bottom, the market's turbulence and the ongoing uncertainties from the Iran war have made some analysts cautious about this optimistic stance.

Fundstrat analyst Sean Farrell, who accurately predicted the market crash in February this year, shared his views on the risks surrounding Bitcoin and the cryptocurrency market during an interview with Coinage. He delved into the potential future trends for Bitcoin, factors that could impact risk assets, and why his cautious outlook on the crypto market remains unchanged. Additionally, he analyzed the cross-asset growth potential of Hyperliquid, considering it one of the most noteworthy protocols in the current crypto space.

Highlights of Insights

Market Timing and Positioning: Now is a "Tug of War" for Traders

• At the beginning of the year, the market exhibited extreme positioning, with low volatility but exceptionally active trading of risk assets. Additionally, miners were selling off at any cost, leaving me to judge that there wouldn’t be much risk-reward space in the first half of the year.
• The current market is not in a clear trending phase and remains a typical trader's market. During market uptrends, reserving cash appropriately is a wiser choice.
• The 30-day moving average of the funding rate has turned negative, which typically indicates the market is approaching a more stable bottom. However, I expect a tough adjustment period before a turning point at the end of the year.

Institutional Dynamics: The "Auxiliary Buy" Vacuum Behind Saylor's Purchase

• While large institutional purchases have injected liquidity, the issue arises that once these spot buys stop, the market may lack sufficient "auxiliary buys" to take over, increasing short-term volatility risk.
• Many alternative asset management firms’ stock prices have suffered. If credit spreads begin to soar, the impact on risk assets like crypto will likely be delayed but severe.

Top Alpha Target: Hyperliquid (HYPE) Paradigm Shift

• Hyperliquid is one of the most attractive assets in our portfolio. Within 15 days before March, its HIP-3 market trading volume reached $28 billion, thanks to users' trading demands for gold and crude oil contracts amid global macro turmoil.
• The 90-day correlation of HYPE with Bitcoin is only about 0.4 (whereas crypto assets typically are near 1). This low correlation makes it an essential addition to building a crypto investment portfolio.
• We set a target price for HYPE at around $100, which still has significant room for growth compared to the current price (around $40).

Macro Risks Deep Dive: Negative Correlation Between Private Credit and AI

• I am most concerned about the pressures in the private credit market. Many funds are being forced to redeem and write down valuations. Credit spreads are widening, and waiting until they have fully surged to act would be too late.
• Many private credit targets are software companies, and the rapid development of AI may reduce the terminal value of such businesses, affecting their credit quality, which may spill over to the crypto market.

Regulation and the Fed: Uncertain Catalysts

• The strong opposition from banking lobbyists and the ongoing controversy over stablecoin yields have rendered the prospects for the bill unclear. This battle is longer lasting than anticipated.
• Investors should closely watch whether the Fed will push back rate-cut expectations to 2027. If it happens, it will amplify the current war risk premium, negatively impacting asset prices.
• I am waiting for a "surrender-style clearing." If prices can breach key moving averages again, and open interest on CME increases, I will be more confident in increasing my investments.

Long-Term Vision: Target Price Remains Unchanged

• Despite being cautious in the short term, I do not plan to adjust my year-end target price of $115,000, as favorable factors may concentrate in the second half of this year.

Sean Farrell on "Predicting the Crypto Market Crash"

Zack Guzman: Welcome to the latest episode of Coinage. I’m pleased to have our guest again—Fundstrat's Head of Digital Asset Strategy, Sean Farrell.

You appeared on our show at the beginning of the year and successfully forecast the market downturn. Now Bitcoin seems to be experiencing a rebound, yet the market remains volatile. I noticed you released a cautious report recently, especially concerning certain sectors of the crypto space. Can you share your views on the current market volatility and how it impacts the cryptocurrency market?

Sean Farrell:

I want to revisit the situation at the beginning of the year when I held a very cautious stance on the market. The market conditions showed extreme positioning, with low volatility but unusually active trading of risk assets, while liquidity remained unclear. Many investment products were trading close to their net asset values (NAV) or even below it. Bitcoin miners were selling off their holdings without regard for cost due to the pressure from market conditions, which undoubtedly exacerbated the downward trend. Taking all these signals into account, I judged that the crypto market in the first half of the year lacked much risk-reward space and might face more significant volatility. This judgment turned out to be correct.

On February 5th, we saw the market's pullback. However, I think that downturn was more of a short-term trading opportunity, favorable for "short-term holding" rather than "long-term buying." Although there were some rebounds afterwards, the overall spillover effects and volatility in the crypto market still require close attention.

There have also been some positive signals in recent market performances. For example, fear in the market has eased, with the volatility in the stock and bond markets rising, indicating that investors are starting to reassess market risks. We also noted signs of some sentiment being cleared in the crypto market, such as the 30-day moving average of the funding rate turning negative. Typically, this phenomenon suggests the market may be nearing a more stable bottom. Furthermore, Strategy has made significant purchases of Bitcoin again recently, injecting some liquidity into the market.

Nevertheless, I remain cautious about the overall positioning of the market. The current market environment continues to face considerable uncertainty, especially during January and February, where cash positioning was at historically low levels. From the perspective of major index performance and the broader stock market, current market pricing still seems overly optimistic, indicating that the market may not have genuinely experienced a comprehensive clearing.

Despite the uncertainty in the current market, I maintain an optimistic outlook on Bitcoin’s long-term prospects. I believe that before the end of the year, the market may witness a significant upward turn, but prior to that, the crypto market may need to endure a relatively challenging adjustment period.

For investors, closely monitoring the global macroeconomic environment is crucial, particularly the Fed’s monetary policy, geopolitical risks, and the potential pressures in the private credit market. These factors will not only impact the traditional financial market but will also profoundly affect the cryptocurrency market through spillover effects. Nonetheless, I still believe that Bitcoin's fundamentals remain robust and that its value is likely to continue growing in the long term.

Do these risks have to materialize? Not necessarily. But I think these risks still exist, especially considering that there are many potential uncertainties in the market. For instance, geopolitical risks remain a key issue worth monitoring. At the same time, international oil prices are still high, nearing $100 per barrel, while the credit market is showing some signs of deterioration. Although these issues do not solely stem from geopolitical risks, they indeed present challenges that the market cannot ignore.

Additionally, the Fed is holding a meeting tomorrow. From the current market's expectations regarding interest rate cuts, this year's cuts have essentially been "excluded" from the yield curve. While I believe the Fed's policy adjustment could bring some positive impacts to the market in the second half of the year, in light of the current divisions within the Fed and the uncertainty of its policies, I find it hard to foresee that they will adopt a noticeably accommodative stance to support the market in the short term.

Strategy's Continued Buying, Bitcoin Fund Flows, and Market Risks

Zack Guzman: At the beginning of the year, you mentioned that significant volatility could occur in the market, and you were proven correct as Bitcoin rapidly dropped to around $60,000 and lingered at that low for some time. Even more interesting is that you issued such a warning before the outbreak of the Iran war conflict. This makes me ponder whether similar geopolitical events should also be included in the assessment of market risks?

Moreover, we have capital inflow data from CoinShares indicating that digital asset investment products have seen three consecutive weeks of inflows. You've mentioned Michael Saylor's and Strategy's large-scale buying actions. If the market were to turn in another direction, perhaps Saylor's buying wouldn’t garner the broad attention it does now. But when we combine these factors, there are indeed noteworthy trends emerging. Could this potentially lead to some "crowding out effect," suppressing the enthusiasm of other market participants?

Deep Tide TechFlow Note: Crowding Out Effect is an economic and financial term used to describe a phenomenon where excessive concentration of funds or resources leads to crowding out in other fields or markets. In the crypto market, this concept typically describes how large investors, like "whales," through massive purchases of a cryptocurrency (such as Bitcoin), might inflate prices and attract market attention, thereby forcing other investors to reduce or withdraw their investment in other assets.

Sean Farrell:

I'm not sure if I can label it strictly as a "crowding out effect," but I do see it as part of market risk. We have seen similar situations in the past: where crypto assets have significantly outperformed the stock market in a short timeframe, typically led by large institutional investors or "whales" like Strategy.

The issue is that once these spot buys cease, the overall support for the market may wane. If, in any given week, market demand for Strategy or other whales’ common stock weakens, then after these large purchases vacate, the market may lack sufficient "auxiliary buys" to absorb the sell-offs. This situation could likely lead to further volatility in the market and increase investment risks in the short term.

Why the Crypto Market Remains a Haven for Traders

Zack Guzman: You mentioned at the beginning of the year that many fund managers had almost no cash reserves. Do you think the current market risk-reward situation indicates that the available buying funds in the market are limited, and once investors need to sell, Bitcoin and other crypto assets might be the first to be impacted? I'm curious about what you are most concerned about right now?

Sean Farrell:

I agree with your view, and I am indeed more inclined than some of my colleagues to look at the market tactically. In terms of our current judgment, I believe the market is not far from the bottom, but there is still some distance from the top. However, my task is to help investors manage risk better and outperform Bitcoin through market cycles. Frankly, the current market isn't in a clear trending phase; we are still in a typical trader's market.

For those investors seeking an advantage in the market, forming a clear yet flexible tactical perspective in the short term is crucial. Reflecting on early February, there was a market decline, but now the market has rebounded considerably: Bitcoin's price has risen by about 20% to 25%, with altcoins outperforming even more.

From the current risk-reward perspective, I believe appropriately increasing "dry powder" (i.e., reserved cash) while the market is rallying may be a wiser choice.

Sean Farrell's Continued Optimism about Hyperliquid

Zack Guzman: Arthur Hayes has proposed a price target for HYPE of over $100. When we analyze the actual data driving HYPE's performance, many interesting phenomena can be observed. For example, there are numerous users trading gold, silver, and crude oil contracts on the Hyperliquid platform. Given these factors, do you share Arthur Hayes's optimism about HYPE? If possible, what is your target price for HYPE? I know you have also discussed DATs (Digital Asset Treasuries), what is your perspective on the future development of HYPE?

Sean Farrell:

Last year, we set a target price for HYPE at around $100, which still offers considerable upside compared to the current price (HYPE was $40.55 during the recording).

From a fundamental perspective, Hyperliquid is one of the most attractive assets in our portfolio. This not only includes the Hyperliquid token HYPE but also the associated digital asset treasury company Hyperliquid Strategies, which has also performed outstandingly.

Recently, Hyperliquid launched its HIP-3 market, a permissionless market where anyone can create their own market. These markets primarily consist of tradable assets, such as perpetual futures contracts tracking commodities and stocks.

I’ve shared a chart showing that in the first 15 days of March, the HIP-3 market's trading volume reached $28 billion, mainly thanks to recent cross-asset price fluctuations and global macroeconomic unrest. We noted that many investors were trading crude oil contracts over the weekend, while precious metals had been trading hotspots prior.

These trading activities not only increased Hyperliquid's revenue, but more importantly, this income comes from external assets outside the cryptocurrency ecosystem, which is also why we have observed a significant reduction in the correlation between HYPE and Bitcoin. Traditionally, the correlation among crypto assets is very high, usually close to 1. However, since the beginning of this year (up to last week), the 90-day correlation between HYPE and Bitcoin is only around 0.4, and this low correlation makes HYPE an important complement to building a crypto asset investment portfolio.

In recent weeks, HYPE's price has also seen considerable growth, and there may need to be some adjustments in the short term to digest that rise. But in the long run, I remain confident in the prospects of the Hyperliquid protocol.

Crypto Regulation, the Clarity Act, and Market Structure

Zack Guzman: If we want to alleviate the current market fear, besides the smooth passage of the Clarity Act, what other factors are you monitoring? Or, what kind of final catalyst do you think is needed for you to, like Tom and other crypto bulls, regain confidence in the crypto market’s return to glory?

Sean Farrell:

I want to address regulatory issues first. At the beginning of the year, I was relatively optimistic about the Clarity Act's prospects, believing it could ultimately pass. This optimism was mainly based on two reasons: First, this year is a midterm election year, and the Republican position in Congress is not secure; second, organizations like Fairshake have just raised nearly $200 million in a "war chest" to support related legislative efforts, so I thought at that time the risk balance leaned towards the Clarity Act being able to pass.

However, as time has passed, circumstances have become more complicated. According to information I've gathered in the industry, banking lobbyists are strongly opposed to this bill, and the controversy surrounding stablecoin yields has lasted much longer than expected. This "battle" is more prolonged than many people imagined. Meanwhile, Congress is facing many other higher-priority issues, making the prospects for the Clarity Act more uncertain.

Despite this, I believe the market is underestimating a fact: the SEC and CFTC will still proceed with relevant rulemaking regardless. Therefore, I expect some positive changes in market structure to emerge in the second half of this year, though I still hope that the Clarity Act will eventually pass, as it would be an important milestone.

As for the conditions you mentioned for "reshuffling" or changing my view, I believe if broader risk markets experience some form of "capitulation," it will make me more confident in low-price buying.

Another possible scenario is that geopolitical risk premiums begin to decline, market expectations regarding interest rates stabilize, and the credit market returns to normal. At the same time, if the market can enter a trending phase that exhibits clearer directional movement, I would be more willing to take action.

Specifically, if market prices can breach key moving averages again, institutional funds start flowing back, and CME's open interest increases while basis expands, I will feel more confident in increasing my investments.

Private Credit Pressures and Broader Market Risks

Zack Guzman: In your market judgment, how much of it is based on macroeconomic risk considerations? If we look at the market risks from a more macro perspective, especially regarding pressures in the credit market. However, my professional experience tells me that the real causes of market downturns often do not align with widely discussed risks. So, could the stress in the credit market also pose additional pressure on the crypto market?

Sean Farrell:

I believe there will indeed be an impact; sometimes people might quickly forget some important matters. For instance, recently, everyone has been focused on geopolitical events like the Iran war and its impact on commodity prices, which is certainly important. But in reality, even before these events occurred, we had already seen many concerning issues arising in the broader market, one of which is the deterioration of the private credit market.

Recently, we have seen many private credit funds being forced to redeem while downgrading the valuations of their assets. Of course, I don’t have a full understanding of the overall credit quality of these private credit assets as the differences among them can be significant, but when you repeatedly see these negative news stories, it becomes necessary to remain vigilant about this trend.

In terms of market performance, many alternative asset management companies’ stock prices have suffered significant hits. At the same time, we have observed that credit spreads (a key indicator of corporate financing costs) are gradually widening, consistent with the decline in alternative asset management companies' stock prices. Even though the current absolute level of spreads remains low, it’s worth paying attention to the speed at which spreads are expanding, and that speed does not appear optimistic. If action is taken after credit spreads have fully surged, it will be too late.

This situation may indeed exert some influence on the market, but I don’t believe it will evolve into systemic risk; some issues may relate to tech companies affected by AI. For instance, many private credit investments are in software companies, which might face market share disruptions due to the rapid development of AI. Moreover, AI could lower the terminal value of such firms, further influencing their valuations.

So, this is indeed an issue I am closely monitoring. I am still working to clarify how it might erupt and the specific timing, but in any case, this remains an area of concern.

Why He Hasn't Changed His Bitcoin Target Price

Zack Guzman: Every time you come on the show, we discuss your long-term price forecasts. For instance, I recall your Bitcoin target price at the beginning of the year was $115,000. As you look back on those predictions from January, do you feel the need to adjust them? Or as we approach the end of 2026, will you reevaluate these targets?

Sean Farrell:

It's only mid-March, and I think adjusting these long-term forecasts at this time would not be wise. I still believe we will benefit from some favorable factors we previously emphasized that may manifest in the latter half of this year; therefore, I have no plans to adjust my year-end target price.

Currently, my focus remains on managing market volatility in the short term and increasing investments when the market shows a clearer trend reversal.

Federal Reserve Meeting: What Should Crypto Investors Watch For?

Zack Guzman: What will you be particularly watching in the Fed meeting this Wednesday? How will you interpret the Fed's statement? What do you think crypto investors should focus on?

I remember you mentioned in your recent report that the market seems to be pricing in some "dovish" expectations, anticipating that Fed Chair Powell might release some easing signals at the meeting. But as you pointed out, this situation resembles a tug of war: on one hand, concerns have arisen over the weakness in the job market, especially regarding potential job replacements by AI; on the other hand, inflation risks seem to be resurfacing.

Sean Farrell:

I agree with your viewpoint. Most expect that at this meeting, Powell might adopt a relatively "neutral" stance as he currently has no substantial reason to be overly hawkish in policy.

Investors should focus on the Fed's dot plot and economic forecast summary. These tools will reveal the Fed's latest forecasts on future inflation, economic growth, and unemployment rates, and may also hint at their views regarding future rate-cut paths.

If the dot plot indicates that the Fed is pushing rate-cut expectations to 2027, this could negatively impact asset prices. Such an adjustment may direct the market’s attention to other risk factors and could further amplify the existing war risk premium in the markets. Of course, the ultimate market response will depend on the specific content released by the Fed.

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