In brief
- Fundstrat co-founder Tom Lee said that crypto prices have lagged fundamentals as gold and silver pulled risk appetite away.
- He argued Bitcoin and Ethereum have reached a technical and time-based bottom.
- Ethereum on-chain activity is accelerating even as prices remain under pressure.
Fundstrat co-founder Tom Lee claimed the cryptocurrency market is likely at or near a bottom on Monday, arguing that prices have overshot to the downside even as underlying fundamentals continue to strengthen.
Speaking on CNBC Monday, Lee said crypto had “taken it much worse than we expected,” despite a lack of leverage in the system and improving network activity. He added investor capital was pulled away from digital assets earlier this year by a surge in precious metals.
“I think crypto has suffered from that on a price basis at a time when the fundamentals have been good,” Lee said, adding that the broader economy remains in solid shape despite heightened uncertainty coming out of Washington.
Since Lee’s interview, crypto prices have continued to slide. Bitcoin was trading at $77,357 on Tuesday, down 1.4% over the past 24 hours and 11.8% over the last week, according to CoinGecko data. Ethereum is trading around around $2,265, down 3.5% on the day and more than 22% over the past seven days.
Gold and silver have surged 37.4% and 106.9% respectively over recent months, before reversing sharply late last week. Gold briefly climbed above $5,600 an ounce to a new all-time high before posting its steepest one-day decline since 1983, falling more than 9% on Friday. Silver plunged as much as 27% before staging a modest recovery. Spot gold was last trading near $4,923 an ounce, while silver hovered around $87.
The selloff in crypto has unfolded against a politically charged backdrop, with Lee pointing to the White House’s front-loaded policy agenda ahead of the midterm elections. He said the administration’s tendency to “pick winners and losers” early in the cycle has contributed to market volatility and risk aversion.
Lee also flagged uncertainty around the Federal Reserve, noting that markets often test new or newly empowered central bank leadership. He said the confirmation process for Kevin Warsh, Trump’s pick for Fed chair, and the first Federal Open Market Committee meeting under a new dynamic could make the middle of the year particularly choppy for risk assets.
Historically, early-year market performance has mattered, Lee said, citing data showing that when markets perform well in the first week and month, full-year returns are significantly stronger on average.
From a technical perspective, Lee said conditions now appear aligned for crypto to bottom. He pointed to analysis from advisor Tom DeMark, who had forecast Bitcoin falling to the high $70,000s and ether to around $2,400. DeMark, he said, believed both price levels and sufficient time have now converged, signaling a potential inflection point.
Lee reiterated that Ethereum network activity remains robust, with active addresses and transaction activity accelerating as Wall Street firms continue building out digital asset businesses. That said, the explosion in Ethereum addresses has been attributed to a spike in address poisoning attacks by researcher Andrey Sergeenkov instead of organic growth.
Nevertheless, Lee’s conviction has been reflected in the actions of BitMine Immersion Technologies, a publicly traded Ethereum treasury company chaired by Lee. Last week, BitMine acquired an additional 41,788 ETH worth roughly $96 million, even as unrealized losses mounted amid the downturn.
The firm now holds more than 4.28 million ETH—over 3.5% of Ethereum’s circulating supply—valued at about $9.9 billion. However, based on its most recent SEC filing, BitMine is sitting on more than $6 billion in unrealized losses after accumulating much of its holdings at an average price near $4,000 per ETH.
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Source: https://decrypt.co/356783/fundstrat-co-founder-tom-lee-says-crypto-bottom-is-in-following-market-slump
