Tom Lee: Crypto Set to Rally After Gold and Silver Cool Off
Fundstrat managing partner Tom Lee says crypto markets may lag while gold and silver are in a record rally, but expects Bitcoin and Ethereum to surge once precious metals pause. Speaking on CNBC, Lee argued crypto should benefit from a weaker dollar and an easing Fed, but recent industry deleveraging and a October 10 deleveraging event have reduced the sector’s leverage tailwind. Gold hit a reported all-time high (~$5,100) and silver peaked (~$110) after strong year-to-date gains (gold +17.5%, silver +57%), drawing risk-off flows and investor FOMO away from digital assets. Bitcoin has declined ~30% from its October peak and was trading near support around $86,000 in Lee’s comments; Lee noted fundamentals have improved even if prices lag. He also noted institutional interest in Ethereum, citing BitMine’s purchase of 20,000 ETH (~$58M) and comments from Davos about financial institutions building on Ethereum and smart blockchains. CryptoQuant and other analysts counter that dollar weakness must reflect risk appetite rather than fear for BTC to benefit, pointing to flows into gold and outflows from Bitcoin ETFs during panic. Key takeaways for traders: precious metals strength can temporarily divert capital from crypto; a cooldown in gold/silver could trigger renewed BTC/ETH inflows; deleveraging in 2023 still constrains market liquidity and volatility dynamics; monitor ETF flows, dollar strength, and institutional accumulation for near-term trade signals.
Neutral
The net market impact is neutral-to-moderately bullish in outlook. Tom Lee’s thesis is that a cooldown in gold and silver could re-route investor FOMO and capital back into crypto, potentially sparking rallies in Bitcoin and Ethereum. This is a bullish catalyst if/when precious metals pause. However, several offsetting factors make the immediate effect uncertain: (1) the market is still digesting a major October deleveraging event that reduced liquidity and leverage among exchanges and market makers, constraining upside velocity; (2) current inflows favor traditional safe-havens — gold and silver — indicating risk-off sentiment driven by geopolitical tensions and dollar weakness rooted in fear, which historically does not benefit BTC; (3) ETF flows and spot demand metrics (e.g., Bitcoin ETF outflows noted) show capital rotation away from crypto during panic. For traders: in the short term expect muted or choppy price action until a clear shift from fear-driven flows to risk-on flows appears. Watchables that could turn the view bullish: persistent institutional accumulation (e.g., large ETH buys), stabilization or inflows into Bitcoin ETFs, and a sustained drop in gold/silver momentum. If those occur, prepare for momentum-led BTC/ETH rallies; absent them, crypto may continue underperforming precious metals. Past parallels: after prior gold surges (and risk-off episodes), crypto outperformance only resumed once risk appetite returned (e.g., post-2018 risk cycles).