Fundstrat’s Tom Lee says the metals rally is “sucking oxygen” out of Bitcoin (CRYPTO: BTC) and crypto markets, but predicts a surge for cryptocurrencies nonetheless.
Why Crypto Isn’t Rallying Despite Bullish Fundamentals
Lee said on CNBC on Monday that crypto prices are stuck despite improving fundamentals: it’s a simple case of money flowing to where the action is.
Gold crossed $5,000 and silver hit $110—the kind of massive moves that traders pile in to catch the momentum—money that would normally flow into crypto.
Many traders use borrowed money or options to amplify their bets.
When they’re doing that in gold and silver, they’re tying up their capital and can’t use it to buy Bitcoin or Ethereum at the same time.
The problem is worse for crypto because the industry massively deleveraged after the October crash.
Lee says that event “crippled many of the key players in industry, some exchanges and market makers,” leaving the sector “limping along” without the leverage that typically amplifies rallies.
So even though fundamentals have improved—Wall Street now views tokenization and blockchains as converging with traditional finance—prices aren’t keeping up because gold and silver have taken over.
Wall Street Is On Board With Crypto
Lee highlighted that Davos made clear Wall Street’s institutional adoption is accelerating.
UBS CEO, Standard Chartered CEO, Euroclear, and major Wall Street players now view traditional finance, tokenization, and blockchains as “one business that’s converging.”
That institutional backing provides fundamental support, but the price action won’t reflect it until capital flows shift back from precious metals.
When Does Bitcoin Surge?
Lee’s thesis is straightforward: when gold and silver take a break, capital rotates back into crypto.
“When gold and silver take a break, in the past that would lead to a Bitcoin and Ethereum (CRYPTO: ETH) surge afterwards,” Lee said.
The weaker dollar and dovish Fed should be bullish for crypto, but the industry doesn’t have the leverage tailwind it normally would.
The parabolic move in silver—up 270% in 13 months—can’t last forever. Technical analyst Carter Worth recently called for selling “all of it,” noting parabolic moves typically mark the end, not the beginning.
The Bigger Picture: Dollar Weakness And Fed Easing
Lee isn’t worried about precious metals strength hurting equities.
He views gold’s rally as anticipating dollar weakness and dovish central banks—both positive for asset prices.
A weaker dollar typically helps large multinational companies by boosting overseas revenue.
Combined with accelerating earnings growth from onshoring and tariff headwind disappearing, Lee sees upside to Fundstrat’s 7,700 S&P 500 (NYSE:SPY) target by year-end.
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