Lee believes that Bitcoin and Ethereum may have formed a bottom after a sharp sell-off. According to him, this was also influenced by increased volatility in the precious metals market.
Fundstrat co-founder Tom Lee stated that cryptocurrency prices are lagging behind fundamental factors. According to him, risk appetite has shifted to gold and silver, which is temporarily putting pressure on the market. Lee believes that Bitcoin and Ethereum have reached a bottom both technically and in terms of timing.
He also noted the growth of on-chain activity on the Ethereum network, despite prices remaining under pressure.
Fundstrat co-founder Tom Lee said on Monday that the crypto market has most likely already bottomed out. In his assessment, the sell-off went further than real indicators should have allowed.
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On CNBC, he noted that the decline was stronger than expected. At the same time, he said there is no significant leverage overload in the market, and network activity continues to grow. Lee also added that at the beginning of the year, some money left cryptocurrencies for gold and silver as those assets quickly appreciated.
“I believe that cryptocurrencies became cheaper precisely when the fundamental picture remained healthy,” Lee said.
He separately emphasized that the economy as a whole looks resilient, although uncertainty has increased due to decisions from Washington.
After this comment, the market continued to decline. On Tuesday, Bitcoin was trading around $77,357. Over the past day, it lost 1.4%, and over the week it dropped by 11.8%, according to CoinGecko. Ethereum is holding around $2,265. For the day, it fell by 3.5%, and for the week the drop exceeded 22%.
Ethereum price dynamics. Source: CoinGecko
In recent months, gold and silver have risen by 37.4% and 106.9% respectively, but at the end of last week they sharply reversed downward. The price of gold briefly rose above $5,600 per ounce and set a new all-time high, after which it saw the strongest one-day drop since 1983. On Friday, the metal lost more than 9%.
Silver at one point crashed by almost 27%, after which it was able to partially recover. At the moment, spot gold is trading near $4,923 per ounce, and silver is holding around $87.
The crypto market sell-off is taking place against the backdrop of a tense political environment. Lee linked this to the White House’s active agenda ahead of the midterm elections. According to him, the administration’s desire to pre-select winners and losers has increased volatility and reduced risk appetite.
Lee also pointed to uncertainty around the Federal Reserve. He noted that markets often test the resilience of new or strengthened central bank leadership. The confirmation process for Kevin Warsh, Donald Trump‘s candidate for Fed chair, as well as the first FOMC meeting under new conditions, could make the middle of the year especially stressful for risk assets.
Speaking about historical data, Lee noted the importance of the beginning of the year. According to him, statistics show that strong performance in the first week and first month often leads to higher year-end results.
From a technical standpoint, conditions for a crypto market bottom are now favorable. Lee referred to the analysis of advisor Tom DeMark, who previously predicted Bitcoin would fall to the high $70,000 range and Ethereum to around $2,400. According to DeMark, both price levels and the necessary timing factor have now coincided, which may indicate a reversal.
See also: Bitcoin Rebounded Above $71,000 After Market Oversold
Lee also emphasized that activity on the Ethereum network remains high. The number of active addresses and transaction volumes are growing, while Wall Street companies continue to develop business in the digital asset sector. At the same time, he clarified that the spike in addresses is largely due not to organic growth, but to “address poisoning” attacks, as previously reported by researcher Andrey Sergeenkov.
Lee’s confidence is also reflected in the actions of BitMine Immersion Technologies, a public company with Ethereum in reserves, of which he is chairman. Last week, BitMine acquired another 41,788 ETH worth about $96 million, despite growing unrealized losses amid the market decline.
The company now owns more than 4.28 million ETH, which exceeds 3.5% of the circulating supply of Ethereum. The total value of these assets is estimated at about $9.9 billion. However, according to the latest report to the SEC, BitMine has more than $6 billion in unrealized losses, as a significant portion of Ethereum was purchased at an average price of about $4,000 per coin.
