Market turbulence ahead: Why is crypto dropping in H1 2026? Fundstrat's detailed forecast reveals

The crypto market stands at a crossroads. While current Bitcoin prices hover around $90.79K and Ethereum trades near $3.12K, prominent market strategists are cautioning investors to prepare for a potential pullback in the coming months. Sean Farrell, leading the crypto strategy division at Fundstrat, has outlined a comprehensive 2026 outlook that explains why certain market corrections may be inevitable.

The Case for a Near-term Decline

Farrell’s analysis suggests that despite underlying bullish fundamentals supporting long-term growth, the first and second quarters of 2026 present meaningful headwinds. His base scenario forecasts a substantial correction across major assets: Bitcoin could retrace to the $60,000–$65,000 range, Ethereum might test $1,800–$2,000 levels, and Solana could decline to $50–$75. Given today’s prices, these projections represent significant downside from current levels.

Why is crypto dropping in this framework? According to the analysis, several structural risks require resolution before the market can sustain higher valuations. These risks aren’t necessarily bearish signals but rather opportunities disguised as volatility—strategic entry points for positioned investors who can weather near-term uncertainty.

Risks Worth Monitoring

The analyst emphasizes that liquidity conditions in early 2026 may tighten, creating temporary dislocations in the market. Rather than signaling fundamental weakness, this period offers a necessary “reset” for healthier market structure. Farrell advocates maintaining a measured, defensive posture until clear evidence of trend reversal materializes. This approach prioritizes capital preservation over aggressive positioning during the uncertain phase.

Year-end Rally Potential

The longer-term picture tells a different story. Farrell maintains an optimistic stance for the remainder of 2026, with Bitcoin targeting approximately $115,000 by year-end and Ethereum potentially reaching $4,500—representing substantial gains from both current prices and the projected interim lows.

Why Ethereum Could Outperform

Within this dual-scenario framework, Ethereum is positioned for relative strength. Several structural advantages support this thesis: the absence of ongoing miner selling pressure, insulation from MSTR-related capital flows, and reduced quantum computing risk concerns compared to Bitcoin. These factors create more favorable capital flow dynamics for ETH, potentially driving outperformance during recovery phases and consolidation periods alike.

The 2026 outlook ultimately suggests that current market participants should view potential weakness not as a collapse, but as a recalibration phase—one that distinguishes between temporary volatility and genuine market health.