This firm has been bullish on crypto for two years – now it’s calling a top

By Steve Goldstein

BCA Research says the percentage of bitcoin in profit is now at levels previously associated with peaks

In any other asset, you’d call it a correction – bitcoin prices have dropped 10% from their record level reached as President Donald Trump was inaugurated on Jan. 20.

While such moves are not uncommon for a famously volatile asset, one firm that’s been bullish for the last two years – a period in which bitcoin (BTCUSD) prices have quadrupled – is now calling a top.

Analysts at BCA Research led by Juan Correa, strategist for global asset allocation, say there are now in place all the classic signs of a top, including Trump’s own involvement in the launch of two so-called memecoins with low public floats, which they say “signal a desire for personal enrichment instead of spreading gains to new buyers.”

Granted, institutional investors are not holding such cryptocurrencies, and memecoins account for just under 2% of the entire crypto market, by BCA’s calculations. But the strategists say the surge in memecoins is a symptom of a larger trend, that consensus is now very bullish on crypto: The bitcoin ETFs were the most successful exchange-traded-fund launches in history, with BlackRock CEO Larry Fink saying big investors are discussing whether to allocate up to 5% of their portfolios to bitcoin. Fink said bitcoin’s price could climb as high as $700,000.

“We are concerned that this raging optimism is a sign that we are near a top,” says the BCA team, which points out the supply of bitcoin in profit is over 90% – historically a proportion at which tops have formed in bitcoin prices. Eight of the top 10 most downloaded financial apps are crypto trading apps, they add.

They also flag macroeconomic concerns, including that deficit spending may be less than expected. “A U.S. economy that is both cooler and less fiscally irresponsible than expected is not conducive to bitcoin continuing its explosive performance,” they say.

The BCA strategists insist they’re not in the camp that thinks crypto is a scam whose prices will fall to zero. “We remain structurally positive on bitcoin and believe that it has a place in a multiasset portfolio. With that said, sentiment matters, and even the best asset cannot be bought at any price,” the strategists say. At $75,000, they would be “more enthusiastic buyers.”

They add that one risk to their view that bitcoin prices may have topped is if Trump follows through on the idea of strategic bitcoin reserve, which would hold crypto obtained through law-enforcement seizures. “The reserve would only commit the federal government to hold on to these coins. Still, the news would be marginally positive in the short term, though, in our view, it would mark the top of the cycle,” they say.

There’s also the possibility that there’s a new paradigm where memecoins are actually the new standard for raising capital and where financial guardrails have been completely abandoned. In that vein, they went and created their own memecoin. It’s called Liquidity Trap. “The name of this coin is a homage to the historic work our BCA forefathers have done on liquidity and its effect on the macro economy. It is also called Liquidity Trap because it is literally a trap for your liquidity – as in any money that you put here, you will most certainly lose forever,” they say.

The markets

U.S. stock futures (ES00) (NQ00) pointed lower early Tuesday after a positive day on Monday. Gold (GC00) eased after reaching a record high.

   Key asset performance                                                Last       5d     1m      YTD     1y 
   S&P 500                                                              6066.44    1.20%  3.94%   3.14%   20.80% 
   Nasdaq Composite                                                     19,714.27  0.31%  3.52%   2.09%   25.92% 
   10-year Treasury                                                     4.527      9.50   -13.00  -4.90   27.45 
   Gold                                                                 2929.4     2.76%  9.25%   10.99%  44.04% 
   Oil                                                                  73.25      1.27%  -7.02%  1.92%   -4.80% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Fed Chair Jerome Powell heads to Capitol Hill for the first of two days of testimony on the semiannual monetary-policy outlook.

Coca-Cola (KO) reported stronger-than-forecast sales growth. Shopify (SHOP) guided for lower margins than forecast though earnings came in slightly ahead of estimates.

After the close, Super Micro (SMCI) and Lyft (LYFT) report results.

The activist Elliott Investment Management, which reportedly has taken a stake in BP, has increased its stake in refiner Phillips 66 (PSX) according to the Wall Street Journal.

The 25% steel and aluminum tariffs announced by the White House officially are due to take effect on March 12. European Union President Ursula von der Leyen promised “firm and proportionate countermeasures,” as Canadian Prime Minister Justin Trudeau talked of a “firm and clear” response.

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The chart

The stock market can become numb to tariff announcements, according to HSBC, which looked at the 2018-to-2020 period, also under Trump, and highlighted dates of key tariff announcements. The bank’s strategists are overweight on equities and say the real game changers were last month’s inflation data, which made yields move away from what they saw as the danger zone, and last week’s quarterly refunding announcement, in which Treasury Secretary Scott Bessent said he would maintain for “several quarters” the coupon and auction sizes he previously criticized under his predecessor, Janet Yellen.

Top tickers

Here were the most active stock-market ticker symbols on MarketWatch as of 6 a.m. Eastern time:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   PLTR    Palantir Technologies 
   GME     GameStop 
   AMZN    Amazon.com 
   AAPL    Apple 
   MMM     3M 
   TSM     Taiwan Semiconductor Manufacturing 
   AMD     Advanced Micro Devices 
   BBAI    BigBear.ai 

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-Steve Goldstein

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  02-11-25 0912ET
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