Crypto markets are being overshadowed by record gold and silver prices according to Fundstrat’s Tom Lee, who predicts a surge will occur once the rally in precious metals takes a breather.
Crypto markets will likely catch up once a breather is taken by gold and silver from their recent rallies, according to a prediction by Fundstrat managing partner Tom Lee.
It was stated by Tom Lee on CNBC’s Power Lunch on Monday that crypto should be trending higher in an environment of a weaker dollar and an easing Federal Reserve.
However, the leverage tailwind is missing due to the industry’s recent deleveraging, and as long as gold and silver continue to rise, it is argued by Tom Lee that a FOMO-driven shift toward those metals is occurring instead of crypto.
“Because when gold and silver take a break, then and in the past, that would lead to a Bitcoin and Ethereum surge afterwards.”
An all-time high of $5,100 was reached by gold prices on Monday, following a 17.5% gain since the start of the year. Silver also skyrocketed, hitting a peak of $110 at the same time after it surged 57% so far this year.
The surge in precious metals is attributed by market observers to rising geopolitical tensions, trade tariff threats, and US dollar weakness, which are driving investors toward safe-haven assets.
Markets Still Reeling From October’s Crash
In the earlier portion of the interview, the ripple effects of the Oct. 10 deleveraging event were explained by Tom Lee as a primary cause for the market’s current state. This shock, he noted, “crippled many key players in the industry,” including exchanges and market makers. Consequently, it was observed by Lee that the sector is “limping along,” even though a significant improvement in fundamentals has been achieved.
Since its October peak, 30% of Bitcoin’s value has been lost, with the asset currently struggling to establish any momentum above the $95,000 mark. This lack of upward pressure resulted in a tanking back to the $86,000 support level on Monday.
“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.”
Meanwhile, according to Lookonchain, an additional 20,000 ETH was purchased for $58 million on Monday by BitMine, the Ether treasury firm led by Tom Lee.
The Davos event also “highlighted financial institutions are set to build on Ethereum and smart blockchains,” as was stated by Tom Lee on X.
Bitcoin’s Next Move Hinges on Risk Appetite, Not Fear
Nevertheless, it was stated by CryptoQuant analyst “GugaOnChain” on Monday that dollar weakness does not automatically guarantee a rise 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.”
