Fundstrat Global Advisors managing partner Tom Lee says cryptocurrency prices are failing to reflect improving industry fundamentals as strong moves in gold and silver divert investor attention and capital.
Speaking on CNBC’s Power Lunch, Lee says the crypto sector continues to feel the effects of a major deleveraging event that occurred on October 10, which he says “crippled many of the key players in the industry,” including exchanges and market makers.
That sell-off was triggered by President Trump threatening new, heavy tariffs on Chinese imports, specifically targeting rare earth metal restrictions.
He adds that the industry is still “limping along” despite what he describes as a significant improvement in fundamentals.
Lee says institutional sentiment toward blockchain technology has shifted materially.
He points to discussions at the World Economic Forum in Davos, where he says Wall Street increasingly views traditional finance, tokenization and blockchains as converging into a single business model.
He cites executives from firms including UBS, Standard Chartered and Euroclear as supporting this view.
Despite those developments, Lee says precious metals are drawing capital away from crypto.
“The precious metal move has sucked a lot of the oxygen out of the room,” he says, adding that crypto prices are “not quite keeping up with fundamentals.”
Lee says part of the dynamic is mechanical. As gold and silver rise, he says investors using margin or options allocate capacity toward metals instead of other risk assets such as large-cap technology stocks or cryptocurrencies.
He adds that crypto feels this more acutely because the industry has already delivered. Lee says crypto would typically benefit from a weaker dollar and easing Federal Reserve policy but lacks leverage-driven tailwinds.
He adds that historically, pauses in gold and silver rallies have preceded surges in Bitcoin (BTC) and Ethereum (ETH).
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