Fundstrat head of research Tom Lee said crypto and equities could open 2026 with a “painful drop”, even as he kept a bullish view on the year’s finish. In his view, blockchain and AI remain supported themes, but tariffs and political divisions may prevent markets from sustaining an early rally.
Speaking Tuesday on The Master Investor Podcast, Lee said stocks could see a 15% to 20% pullback this year. He still expects a strong close by year-end, pointing to a more dovish Federal Reserve stance and the end of last year’s quantitative tightening. Near-term pressure remains. His outlook turns more constructive later in the year.
Bitcoin’s next all-time high is the main signal he is watching
On Bitcoin, Lee said he still expects the asset to reach a fresh all-time high this year, though he did not repeat his earlier $250,000 target. He framed a breakout as a key milestone, one that would show the market has fully moved past the last major deleveraging shock.
Lee referenced the crash on October 10 last year, when about $20 billion in leveraged positions were liquidated. For him, 2026 is a major test: if Bitcoin prints a new high, that would confirm the market has absorbed that event.
Market-maker liquidity remains a weak point
Lee also addressed why crypto has recently diverged from gold. He said cyclical deleveraging events can hit the market hard and damage market makers, which he described as the equivalent of a central bank for crypto. If those liquidity providers are weakened, price swings can become more severe.
He added that these disruptions are likely to keep affecting stability until crypto sees broader mainstream adoption and deeper institutional backing.
Gold and materials also feature in the allocation view
Lee said energy and basic materials could be among the best-performing sectors this year, and he recommended including gold in portfolios. Into The Cryptoverse CEO Benjamin Cowen shared a similar view on Tuesday, saying precious metals outperformed crypto in 2025 and could do so again in 2026.
Cowen differed on timing. He said precious metals may face a “major correction” later this year, while crypto could fall even more sharply at that point. His message was simple: trade the market in front of you, not the one you hope to see.