Markets could face a challenging opening to 2026 before stabilizing later in the year, according to Fundstrat’s head of research Tom Lee. Lee cautioned that both crypto and equity markets may experience a “painful” decline early in the year, driven by geopolitical uncertainty and macroeconomic pressures, before recovering as conditions improve.
Lee explained that while blockchain and artificial intelligence remain long-term growth drivers, near-term risks could delay a sustained rally. He highlighted tariffs, political divisions, and global tensions as factors likely to weigh on investor sentiment. These issues, he said, could mirror the uneven market environment seen previously, where optimism is tempered by policy uncertainty.
Lee projected a 15% to 20% correction in U.S. equities, noting that such pullbacks are part of normal market cycles. However, he expects conditions to improve toward the end of the year, supported by a more dovish Federal Reserve stance and the end of quantitative tightening, which could help restore liquidity and confidence.
Despite near-term volatility, Lee still expects Bitcoin to reach a new all-time high, signaling that the market has fully absorbed past deleveraging shocks. He emphasized that the unwinding of excessive leverage has disrupted crypto markets, weakening liquidity providers and contributing to Bitcoin’s temporary underperformance relative to gold.
Cryptoverse CEO Benjamin Cowen said;
Looking ahead to 2026, Lee identified energy and basic materials as potential outperformers, while also recommending gold as a portfolio hedge. Other analysts share the view that metals may continue to outperform crypto in the short term, even as digital assets remain positioned for longer-term recovery.
Overall, Lee’s outlook suggests early turbulence followed by a late-year rebound, reinforcing the need for disciplined risk management and realistic expectations in volatile markets.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.