Farrell said investors should become more aggressive over a medium- to long-term timeframe, while noting that Bitcoin’s recovery will not move in a straight line.
Bond Market Pressure Becomes a Bitcoin Catalyst
The strategist pointed to rising Treasury yields and the U.S. government’s growing debt burden as key parts of the Bitcoin thesis.
According to Farrell, the U.S. debt-to-GDP ratio is above 120%, while the fiscal deficit stands at roughly 6% to 7% of GDP and is expected to increase. At the same time, the market is pricing multiple rate hikes over the next 12 months, while the 10-year Treasury yield has climbed to levels not seen in years.
Farrell argued that this creates a difficult situation for the U.S. government because higher borrowing costs make an already large deficit more expensive to finance.
He highlighted a recent Treasury strategy involving the purchase of longer-dated Treasury securities while funding those purchases through shorter-term bill issuance. Farrell sees the approach as part of a broader policy response to rising government financing costs.
In his view, shifting issuance toward Treasury bills increases liquidity in the financial system. Banks can absorb the additional bill supply, which Farrell believes contributes to money creation and, eventually, monetary debasement.
That is where Bitcoin enters the picture. Farrell said monetary debasement has historically supported scarce assets such as Bitcoin. He believes the effects of this policy approach are now beginning to show up in crypto markets.
Bitcoin Benefits From a Longer-Term Liquidity Shift
Farrell does not expect monetary debasement to trigger an immediate Bitcoin surge. Instead, he compared the process to a “melting ice cube,” arguing that the effects become clearer over years rather than days.
He noted that the U.S. policy response has been developing gradually and said this helps explain why Bitcoin’s latest bear market decline was less severe than previous cycles.
Bitcoin fell roughly 55% during the latest downturn, according to Farrell, compared with the 70% to 80% drawdowns seen during earlier bear markets.
That does not mean Farrell expects Bitcoin to rise without setbacks. He acknowledged that traders using leverage will be forced out during short-term pullbacks. However, he expects investors with a longer time horizon to view declines as opportunities to accumulate Bitcoin and other crypto assets.
Farrell Sees Bitcoin Above $100K Before 2027
Farrell previously expected Bitcoin to reach $115,000, but he now believes that target will not be reached in 2026. Still, he remains bullish on Bitcoin’s year-end prospects.
“I actually do think we could get above that 100k level, you know, before 2026 wraps up,” Farrell said.
He also suggested that a roughly 10% Bitcoin pullback will attract buyers looking to enter the market at lower prices.
The forecast comes as Bitcoin has moved beyond the bottoming phase and entered a new cycle supported by improving liquidity conditions. While the price hit $57,700 in June, it has since bounced more than 51% to $87,000 in September. This massive recovery is fueling sentiment that a new bull cycle is in.
Related: Euro Hits 17-Month Low: Is Bitcoin Holding Up Against a Stronger Dollar?
