Tom Lee: Bitcoin Decline Due to Macro Headwinds, Rebound Likely

According to Tom Lee, Co-Founder and Head of Research at Fundstrat Global Advisors, Bitcoin’s recent break below its 200-day moving average—a key technical indicator closely watched by traders—was driven by a cascade of macroeconomic headwinds. “Bitcoin is very sensitive to market liquidity and also perceptions about risk appetite,” Lee told CNBC, pointing specifically to the U.S. government shutdown and a hawkish Federal Reserve as primary catalysts for the cryptocurrency’s decline. These factors created significant pressure on risk assets like crypto, aligning with analysis from other experts who have recently pointed to U.S. dollar strength as a significant macro headwind for digital currencies.

The timing of these macroeconomic pressures proved particularly damaging, coinciding with what Lee described as “the biggest deleveraging in history” on October 10th. This massive market event continues to create ripple effects throughout the crypto ecosystem, with Lee noting that “it’s going to take some time for confidence to come back” as the market works through the aftermath. The combination of technical breakdown and fundamental pressures created a challenging environment for Bitcoin and other cryptocurrencies, testing investor resilience across the board.

Lee tempered his near-term concerns by comparing the current market cleanup to past deleveraging events, suggesting that such periods often create foundation for future recovery. “The October 10th deleveraging was the biggest in history, and that means there are still ripple effects being felt even two weeks later,” Lee explained, indicating that the market requires time to absorb the impact of such significant structural shifts. This perspective acknowledges the severity of the recent selloff while maintaining a constructive view of the market’s ability to recover from extreme events.

Despite the recent technical weakness, Lee highlighted that broader financial market indicators are signaling a positive outlook. He specifically noted that after stocks are up for six consecutive months, historical patterns suggest a flat or positive November, which would support a more constructive environment for crypto assets. This analysis from Fundstrat Global Advisors provides context for understanding how traditional market movements often correlate with cryptocurrency performance, particularly during periods of macroeconomic uncertainty.

The potential for a rebound is strongly supported by prediction market data, where retail sentiment remains notably bullish despite recent market turbulence. On Myriad, launched by Decrypt’s parent company Dastan, users placed a 64% probability on Bitcoin revisiting $115,000 before it falls to $85,000—a significant vote of confidence in the cryptocurrency’s recovery potential. This optimism extends to Ethereum as well, with users assigning a 63% chance that it will hit $4,500 before dropping to $2,500, according to the platform’s data.

This bullish sentiment appears to be translating into early market movements, with Bitcoin and Ethereum showing gains of 1.3% and 2.6% respectively over the past 24 hours, trading at $103,214 and $3,403 according to CoinGecko data. Lee’s observation that “headwinds become tailwinds when you can resolve these things” captures the essential optimism underlying these prediction market probabilities, suggesting that resolution of current macroeconomic pressures could quickly reverse the recent negative momentum.

Lee’s analysis presents a nuanced view of the current crypto landscape, acknowledging the significant challenges posed by macroeconomic factors while maintaining confidence in the market’s underlying resilience. The combination of historical market patterns, prediction market optimism, and the potential resolution of government and Federal Reserve pressures creates what Lee describes as a scenario where current headwinds could transform into future tailwinds. This perspective suggests that investors should view the recent decline as a temporary phenomenon rather than a fundamental shift in cryptocurrency value propositions.

The ongoing analysis from Fundstrat Global Advisors, combined with data from platforms like CoinGecko and sentiment from prediction markets like Myriad, paints a picture of a market at an inflection point. While the October 10th deleveraging event continues to create challenges, the broader financial indicators and historical precedents cited by Lee provide substantive grounds for cautious optimism about Bitcoin and Ethereum’s recovery potential in the coming weeks and months.