Fundstrat managing partner Tom Lee believes cryptocurrency markets are being temporarily held back by the extraordinary rally in gold and silver, even though macroeconomic conditions should normally favor digital assets.
He said crypto prices should be rising in an environment where the US dollar is weakening and the Federal Reserve is easing monetary pressure.
However, he argued that investor attention is currently being absorbed by precious metals, which are experiencing one of their strongest rallies in years.
Lee explained that this dynamic is preventing Bitcoin and Ethereum from fully reflecting their improving fundamentals.
He shared these views during an appearance on CNBC’s Power Lunch.
He said, “Crypto should be going up on a weaker dollar and an easing Federal Reserve.”
Lee added that the crypto market no longer has the leverage-driven momentum it once relied on.
He explained that the industry has deleveraged significantly after last year’s turbulence.
This has reduced speculative excess but also limited upside acceleration.
Without leverage, price movements depend more on organic capital flows.
Gold and Silver Are Drawing Capital Away From Crypto
Lee said that as long as gold and silver continue to surge, they will dominate investor psychology and pull funds away from digital assets.
He noted that fear-based demand is playing a major role in driving metals higher.
“There’s a FOMO into buying that instead of crypto,” he said.
He explained that investors are prioritizing traditional safe havens while uncertainty remains elevated.
This behavior creates a pause in crypto’s upward trajectory.
Lee pointed out that historically, Bitcoin and Ethereum have tended to rally once metals begin to consolidate.
“Because when gold and silver take a break, then and in the past, that would lead to a Bitcoin and Ethereum surge afterwards.”
This pattern suggests crypto may simply be delayed rather than denied its next rally.
Lee sees metals as the current destination for fear-driven capital.
Once that fear eases, crypto could benefit from renewed risk appetite.
Record Highs in Precious Metals Reflect Market Anxiety
Gold prices recently reached an all-time high of $5,100.
The metal has gained 17.5% since the beginning of the year.
Silver has performed even more aggressively.
It surged to a peak price of $110 after gaining 57% during the same period.
Such dramatic moves highlight intense demand for traditional stores of value.
Market observers have linked this trend to rising geopolitical tensions.
Trade tariff threats have also contributed to instability.
Weakness in the US dollar has further amplified the appeal of metals.
Together, these factors are reinforcing gold and silver’s dominance as safe-haven assets.
This environment leaves less capital available for riskier alternatives like crypto.
October’s Deleveraging Event Still Shadows Crypto Markets
Earlier in the interview, Lee explained that crypto markets are still recovering from the October 10 deleveraging event.
He said the event “crippled many key players in the industry.”
This included major exchanges and market makers.
Liquidity was severely reduced across trading platforms.
As a result, price discovery has become slower and less aggressive.
Lee said the industry is now “limping along, but the fundamentals have improved a lot.”
This means structural progress continues even if prices lag behind.
Bitcoin remains under pressure as a result of this weakened liquidity environment.
It has lost around 30% of its value since its October peak.
It has struggled to maintain momentum above the $95,000 level.
On Monday, it fell back toward support near $86,000.
These movements reflect hesitation rather than collapse.
Crypto Prices Lag Behind Strengthening Fundamentals
Lee said crypto valuations are not keeping pace with the industry’s underlying progress.
“I think the precious metal move has sucked a lot of the oxygen out of the room,” he said.
He argued that infrastructure, institutional adoption, and blockchain development are all advancing.
“So, I think crypto prices aren’t quite keeping up with fundamentals.”
He added, “But as you know, when fundamentals go up and to the right, prices eventually follow.”
This reflects his belief that crypto’s current weakness is temporary.
Lee sees the market as storing energy for a larger move.
Once capital rotates away from metals, crypto could respond quickly.
That shift may not require dramatic news.
It may only require stabilization in precious metals prices.
Ethereum Builds Momentum Through Institutional Adoption
Lee also highlighted Ethereum’s growing role in institutional finance.
He said the Davos event “highlighted financial institutions are set to build on Ethereum and smart blockchains.”
This shows that blockchain infrastructure is becoming a core part of financial modernization.
Ethereum is increasingly viewed as a foundation for tokenized assets and digital settlement systems.
Meanwhile, Lee’s Ethereum-focused treasury firm BitMine continues accumulating ETH.
On Monday, BitMine purchased another 20,000 ETH for $58 million.
This indicates strong conviction in Ethereum’s long-term value.
Such purchases reflect confidence in network adoption rather than short-term speculation.
They also signal belief that Ethereum will remain central to decentralized finance.
Risk Appetite, Not Fear, Will Decide Bitcoin’s Next Move
Not all analysts agree that dollar weakness alone will lift Bitcoin.
CryptoQuant analyst “GugaOnChain” said market behavior shows fear still dominates.
They said, “The flight from the dollar to gold, while Bitcoin ETFs suffer massive outflows, proves that in moments of panic, the refuge is classical, not digital.”
This suggests Bitcoin is not yet viewed as a primary safe haven.
They added, “For BTC to thrive, the weakness of the American currency must come from risk appetite, not from fear.”
This means optimism is more important than macro signals alone.
If markets remain anxious, gold may continue to outperform.
If confidence returns, crypto could rapidly regain momentum.
That shift in sentiment will determine crypto’s next major trend.
