On a recent episode of CNBC’s “Power Lunch,” Tom Lee, a managing partner at Fundstrat, expressed his belief that Bitcoin and Ether are on the brink of significant gains once the ongoing rally in gold and silver begins to subside. He noted that despite an underwhelming performance from cryptocurrencies in recent weeks, their core fundamentals remain strong.
Lee highlighted that the surge in precious metals has diverted investor interest away from cryptocurrencies. He explained that recent redelegation in the crypto sector has stripped away leverage, a factor that typically supports growth in digital assets. “Crypto doesn’t have the leverage tailwind because the industry delevered,” Lee said, emphasizing that the current chase for gold and silver by investors has weakened demand for cryptocurrencies.
Historically, Lee illustrated, periods when precious metals stabilize often lead to sharp rallies in Bitcoin and Ethereum. His comments come during a time when gold has surged to new heights, reaching a record price of $5,100, marking an impressive 17.5% increase since the year began. Silver has seen even greater gains, soaring 57% to peak at $110 due to factors such as geopolitical tensions, trade tariff uncertainties, and ongoing depreciation of the US dollar—factors that have redirected investor focus toward traditional safe havens.
Lee also commented on the aftermath of a significant deleveraging event that occurred on October 10, which he described as having severely impacted key players within the crypto ecosystem. He acknowledged that while the sector is currently “limping along,” the fundamental indicators of cryptocurrencies have improved since that notable day.
Despite these positives, Bitcoin’s performance has been disappointing; it is down approximately 30% from its October peak and has struggled to maintain momentum above the $95,000 mark, recently retracing towards support levels around $86,000. Lee remarked that the rise in precious metals has effectively “sucked a lot of the oxygen out of the room,” suggesting that current prices for Bitcoin lag behind its supportive fundamentals.
On an encouraging note, there appears to be renewed institutional interest in Ethereum. Lee’s firm, BitMine, has recently acquired 20,000 ETH for $58 million. This move aligns with discussions at the Davos forum, which highlighted a growing interest among financial institutions in developing on Ethereum and other smart contract platforms.
However, not all market analysts agree that a weaker dollar will benefit Bitcoin in the current environment. GugaOnChain from CryptoQuant suggested that recent outflows from exchange-traded funds indicate a continued preference for gold, especially during periods of market stress. They stated, “For BTC to thrive, the weakness of the American currency must come from risk appetite, not from fear.”
As the crypto market navigates these challenging conditions, the interplay between digital assets and precious metals remains a focal point for investors and analysts alike.
