Bitcoin Could Crash Into $50,000s Before Skyroacketing, Claims Fundstrat CEO

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In a recent interview on CNBC’s “Squawk Box,” Tom Lee, Chief Information Officer and head of research at Fundstrat Capital, expressed his belief that Bitcoin might experience further declines before experiencing a substantial recovery. On January 13th, Lee discussed broader market issues like inflation, bond yields, and earnings, then applied these concerns to the crypto market, particularly Bitcoin’s potential trend.

Could Bitcoin Crash Into The $50,000s?

Lee commented that Bitcoin has dropped approximately 15% from its peak, which is typical for a highly volatile asset like this. This drop is likely due to global liquidity conditions. He added that significant price fluctuations are common in the digital currency market. Furthermore, he pointed out that one technical marker suggesting potential future volatility could be if Bitcoin reaches $70,000.

Although it’s less probable, it’s still feasible that the price might dip down to the $50,000 range. As Lee pointed out, this would represent a return to an earlier level, but it wouldn’t mark any new low; instead, it would be followed by an upward trend.

Lee’s viewpoint depicts a potential dual trajectory for Bitcoin: a possible descent to the “lower $50,000 range,” followed by an upward trend that could potentially reach figures like “$200,000” or even “$250,000.” He emphasized that while there might be a short-term dip, long-term investors should remain undeterred.

The head of Fundstrat believes that Bitcoin should be viewed from a long-term perspective. He asserts that investing at the current price of $90,000 isn’t likely to result in a loss. If someone is trying to predict when to sell for a profit at $70,000, they might get lucky, but Bitcoin could potentially rise even more this year. The CEO suggests that $90,000 is still an excellent opportunity to buy, with potential prices as high as $200,000 or even $250,000 by the end of the year.

In the midst of a broader discourse about market movements, I, as a researcher, weighed in on the topic. The dialogue commenced with the recent downturn in equities and the potential impact of the Federal Reserve’s decision to halt rate reductions on investor sentiment. I emphasized the significance of upcoming inflation data, stating, “For nearly a month now, we’ve been correcting… I am eagerly anticipating Consumer Price Index (CPI) figures below 2.5%. I believe such data would instill a sense of confidence in the markets, reinforced by earnings.”

He further emphasized temporary distortions in the inflation data due to unexpected occurrences like hurricanes and fires. “Last year’s hurricanes affected the quality of inflation measurements because, for example, hotel reservations increased… Anomalies such as these will also impact used car prices,” Lee explained, suggesting that when these unusual events subside, overall inflation might decrease.

In the context of Federal Reserve policy discussions, Lee expressed a moderate viewpoint, stating, “I believe the optimal scenario is for the Fed to execute one rate reduction because the economy is robust and they continue to exhibit dovish tendencies… They will eventually reach a neutral stance. If they extend the reductions to 2026 and 2027, that’s an extended period to bolster markets.” He feels market stability is influenced significantly by policy unpredictability, especially under new leadership.

When inquired about stock valuation, Lee compared it to the potential rise of bond yields: ‘In my opinion, if the ten-year bond yield reaches 5%, it would equate to a Price-Earnings (PE) ratio of 20. The median PE is 17 times. I believe stocks currently offer better value than bonds.’

At press time, BTC traded at $95,618.

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2025-01-14 14:10