Lee believes that Bitcoin has moved beyond its typical four-year cycle, which would have seen it peak in October.
According to Tom Lee, Bitcoin is subject to severe volatility, despite the influx of capital into BTC-linked spot exchange-traded funds (ETFs) and the purchase of the first cryptocurrency by major Wall Street firms. Lee believes that Bitcoin has moved beyond its typical four-year cycle, which would have seen it peak in October. This indicates an extension of Bitcoin's market cycle, the businessman believes.
The co-founder of Fundstrat believes Bitcoin will experience a 50% decline. Then, Bitcoin will plummet from its current $110,000 to $55,000, a price last seen in September 2024. Sharp declines in Bitcoin's price have already occurred. In November 2021, Bitcoin reached an all-time high of $69,000, but three months later, by the end of January 2022, it had fallen by approximately 50% to $35,000.
Tom Lee believes that Bitcoin remains overly sensitive to traditional financial market movements. Stock markets typically experience declines of 25%, especially over the past six years. Therefore, if the S&P 500, a U.S. stock index comprising the 500 largest public companies by market capitalization, were to fall by 20%, Bitcoin could fall by as much as 40%, Lee suggested.
Recently, CNBC host Jim Cramer made the exact opposite statement. He said that cryptocurrencies are now influencing the S&P 500, not the other way around.