SKN | Michael Terpin Cautions Bitcoin Could Revisit $40,000 Before Sustainable Recovery Takes Hold

Bitcoin may need to endure another significant drawdown before staging a durable rebound, according to entrepreneur and investor Michael Terpin, who warned that prices could revisit the $40,000 range despite prior optimism around higher targets. His comments arrive as digital asset markets remain volatile, macro liquidity tightens intermittently, and investors reassess whether recent rallies were driven by structural demand or temporary positioning relief.

Market Reaction: Elevated Volatility and Fragile Support Levels

Bitcoin has fluctuated sharply in recent sessions, trading well below prior cycle highs while testing technical support zones that many market participants view as pivotal. From peak levels above $70,000, the asset has retraced more than 30% at various points during the current correction, reflecting both macro sensitivity and thinning speculative participation. Derivatives open interest has declined roughly 20% from recent highs, indicating that leveraged positions have been reduced, though not fully reset.

Terpin’s projection of a potential return to the $40,000 band would represent an additional material decline from recent trading ranges, a move that would likely trigger renewed debate around cycle structure and long-term valuation frameworks.

Macro Drivers: Liquidity and Risk Appetite Remain Central

Broader macroeconomic conditions continue to shape crypto price action. Elevated U.S. Treasury yields, a firm dollar, and uncertainty around interest rate trajectories have constrained risk assets globally. In previous cycles, Bitcoin experienced drawdowns exceeding 50% before establishing durable bottoms, particularly during periods of tightening liquidity. While institutional access has improved in the current environment—through spot exchange-traded products and regulated custody—the asset remains sensitive to global capital flows and investor risk tolerance.

Terpin’s caution underscores the view that recovery phases often require both sentiment reset and macro stabilization before sustained upside can develop.

Investor Psychology: Resetting Expectations

Investor sentiment has moderated significantly compared with earlier bullish phases, with funding rates hovering near neutral and options markets reflecting balanced positioning between downside hedges and upside exposure. The psychological shift from aggressive dip-buying toward capital preservation mirrors patterns observed in prior consolidation phases. For institutional investors, risk management frameworks increasingly prioritize volatility control and drawdown tolerance, limiting the likelihood of speculative excess driving premature rallies.

Structural Factors: Adoption Versus Price Cycles

Despite the cautionary outlook, structural indicators such as network hash rate and long-term holder supply remain comparatively stable. Spot Bitcoin ETFs have retained substantial assets under management, suggesting that strategic allocations persist even as short-term sentiment weakens. This divergence between adoption metrics and price action reflects a maturing asset class, where infrastructure growth does not always translate into immediate market appreciation.

Looking ahead, Bitcoin’s path will likely hinge on a combination of macro easing, sustained institutional participation, and confirmation that selling pressure has been fully absorbed. A revisit to the $40,000 region would test long-term conviction, but it could also serve as a reset point if accompanied by improved liquidity conditions. For crypto investors, Terpin’s warning emphasizes the importance of distinguishing between short-term price retracements and long-term structural evolution, as the market navigates the balance between volatility and maturation.