Tom Lee, head of analysis at Fundstrat, advised traders to brace for a troublesome begin to 2026 earlier than situations enhance within the second half of the 12 months. He warned that political friction and tariff negotiations might trigger important setbacks for each shares and Bitcoin, even when blockchain and AI stay sturdy in the long run.
Tom Lee’s name and instant outlook
Lee stated the Federal Reserve’s extra dovish stance and the top of quantitative tightening set the stage for the following rally.
He put the prospect of a market correction within the mid-teens vary, predicting a decline of about 15% to twenty% at some stage.
He famous that geopolitics and rising political divisions, together with the specter of new tariffs, would put a brake on any instant widespread backlash. He nonetheless expects a restoration on the finish of the 12 months as soon as coverage is eased and liquidity is restored, in keeping with the report.
In accordance with stories, the White Home’s selective assist for sure industries might tip the scales as to which sectors will lead the restoration.
2026 is shaping as much as be much like 2025.
– Good basis 😀
– Tariff hikes and the White Home choosing “winners and losers”
– political division
– Tailwinds from AI and blockchain
However: Fed is dovish now, QT is overSo there could also be a painful decline forward, however we are going to… https://t.co/7Mp3rcOcP1
— Thomas (Tom) Lee (not the drummer) FSInsight.com (@fundstrat) January 20, 2026
Deleveraging continues to harm crypto liquidity
Lee argued that the current squeeze has made the cryptocurrency market weak. Repeated compelled exits have weakened market makers, making worth actions much more risky.
He additionally famous that Bitcoin’s new all-time highs can be an essential sign that the market has weathered these stresses, though he didn’t reiterate his earlier excessive worth targets in his current remarks.
The report highlights the distinction between a technological backlash and a motion backed by broader adoption and deeper institutional currents.
Vital decline in Bitcoin
Regardless of warnings {that a} painful decline might nonetheless happen, some traders aren’t leaving fully. In accordance with stories, some available in the market nonetheless view the sharp pullback as a shopping for alternative somewhat than an exit sign.
Regardless of the uncertainty surrounding tariffs and world politics, Mr. Lee and his camp consider that disciplined buy-in, unfold out over time, has a greater probability of profitable than attempting to time the proper backside whereas worry dominates the headlines.
Picture: MarketWatch photograph illustration/iStock photograph
“Due to this fact, we are going to ‘purchase the dip’, though a painful decline could also be in retailer,” Lee stated within the X submit.
In accordance with a report, over $1.8 billion was liquidated in 48 hours as Bitcoin misplaced floor.
Bitcoin fell to round $88,500 through the selloff, and information from Coinglass exhibits that almost all of positions eradicated had been lengthy, indicating that merchants had been taking positions in hopes of hitting the highs.
The decline worn out features made earlier this 12 months and prompted the cryptocurrency’s market capitalization to plummet, the largest drop since mid-November.
Featured photos from Allrecipes, charts from TradingView
