Fundstrat’s Tom Lee predicts Bitcoin, Ethereum rally once metals rally fades.
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Fundstrat managing partner Tom Lee believes bitcoin and ether are ready to play after the bullish rally in gold and silver begins to cool, arguing that despite recent underperformance, crypto fundamentals remain intact.
Key Takeaways:
Tom Lee says Bitcoin and Ether may rally once the gold and silver glut fades.
Investors argue that crypto is lagging due to FOMO shifting to precious metals.
Despite the price weakness, Lee believes crypto fundamentals have improved since October.
Speaking on CNBC's Power Lunch on Monday, Lee said digital assets should benefit from a weaker US dollar and an easing Federal Reserve.
However, he explained that the crypto markets do not have a key driver of this cycle, as the benefits in the industry have largely disappeared.
Tom Lee: Gold and Silver FOMO Is Holding Crypto Back.
“Crypto doesn't have the power of a tailwind because the industry is weak,” she said, adding that while gold and silver continue to rise, investors are chasing metals instead.
“There is FOMO to buy that instead of crypto,” he said. He argued that historically, periods of precious metal pauses have been followed by sharp rallies in Bitcoin and Ethereum.
The difference has been stark in recent weeks. Gold prices hit a record high of $5,100 on Monday, up nearly 17.5% year-to-date.
Silver moved more aggressively at $110, up 57% year-to-date.
Analysts have linked the rise in precious metals to geopolitical tensions, trade tariff concerns and the lingering weakness of the US dollar, all of which have driven investors to their traditional safe havens.
Lee notes that crypto markets are still reeling from the fallout from the October 10 crash, which “crippled many key players” on exchanges and market makers.
He said the fundamentals had improved meaningfully since then, while the sector was “rocking along”.
Bitcoin has struggled to reflect those fundamentals. The largest cryptocurrency is down 30 percent from October and has been unable to regain momentum above $95,000, having recently slipped to support near $86,000.
“The precious metals movement has taken a lot of oxygen out of the room,” Lee said, adding that prices are lagging fundamentals rather than showing deep weakness.
Tom Lee-Linked Buys $58M in Ether as Institutional Interest Grows
Lee's faith in Ethereum is still clear. On Monday, BitMin, an ether-based treasury firm that contacted Lee, bought another 20,000 ETH for $58 million, blockchain analytics firm Lookonchain reported.
Lee also emphasized the growing interest of financial institutions to build on Ethereum and other modern contract platforms in recent discussions at the Davos forum.
Not all analysts agree that dollar weakness alone will lift Bitcoin. According to CryptoQuant analyst Gugaonchain, recent ETF flows show that investors still like gold in times of stress.
“For BTC to thrive, the US currency must be weak, not from fear, but from risk appetite,” he said.
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