Tom Lee of Fundstrat Anticipates Cryptocurrency Rally After Precious Metals Peak
Tom Lee from Fundstrat believes cryptocurrency markets are currently being eclipsed by gold and silver hitting record highs, though he forecasts digital assets will rally when the precious metals boom subsides.
Tom Lee, who serves as managing partner at Fundstrat, has forecasted that cryptocurrency markets are positioned to rally once the current gold and silver bull runs show signs of cooling off.
Speaking during Monday's edition of CNBC's Power Lunch, Tom Lee noted that cryptocurrency assets should theoretically be experiencing upward momentum given the weakening dollar and the Federal Reserve's easing monetary policy.
Nevertheless, the crypto sector lacks the leverage-driven momentum it once had because the industry underwent significant deleveraging, "and as long as gold and silver are rising, then there's a FOMO into buying that instead of crypto," he said.
"Because when gold and silver take a break, then and in the past, that would lead to a Bitcoin and Ethereum surge afterwards."
The price of gold reached an unprecedented all-time high of $5,100 during Monday's trading session, marking a 17.5% increase since January 1st of this year. Meanwhile, silver experienced a dramatic surge as well, climbing to a peak of $110 at the same time following a remarkable 57% gain year-to-date.
Analysts and market observers have pointed to the rally in precious metals as being fueled by escalating geopolitical tensions, concerns over trade tariff implementations, and the declining strength of the US dollar, which has pushed investors toward traditional safe-haven assets.
October crash still hurting markets
During an earlier segment of the interview, Lee provided context by explaining that financial markets continue to experience the aftershocks of the deleveraging event that occurred on Oct. 10, which "crippled many key players in the industry," some exchanges, and market makers, so the industry is "limping along, but the fundamentals have improved a lot."
The price of Bitcoin (BTC) has declined by 30% from its peak in October and continues to struggle to establish any sustained momentum beyond the $95,000 level, falling back to find support around $86,000 during Monday's trading session.
"I think the precious metal move has sucked a lot of the oxygen out of the room," said Lee.
"So, I think crypto prices aren't quite keeping up with fundamentals, but as you know, when fundamentals go up and to the right, prices eventually follow."
In related news, BitMine, which is Tom Lee's Ether (ETH) treasury firm, acquired an additional 20,000 ETH valued at $58 million on Monday, according to data from Lookonchain.
Lee also noted on X that the Davos event "highlighted financial institutions are set to build on Ethereum and smart blockchains," he said on X.
Bitcoin needs risk appetite, not fear
On the other hand, an analyst from CryptoQuant using the handle "GugaOnChain" argued on Monday that a weakening dollar doesn't necessarily translate into automatic gains for Bitcoin.
"The flight from the dollar to gold, while Bitcoin ETFs suffer massive outflows, proves that in moments of panic, the refuge is classical, not digital," they said.
"For BTC to thrive, the weakness of the American currency must come from risk appetite, not from fear."