Fundstrat's Tom Lee has declared that a crypto market recovery is already underway following a sharp deleveraging event in February. He characterized the recent crash, which saw Bitcoin briefly drop near $60,000, as a mechanical reset rather than a breakdown in long-term fundamentals. Lee pointed to historical patterns where similar drawdowns exceeding 50% were followed by sharp rebounds once excessive leverage was flushed from the system.
Despite current caution in the market—with sentiment indicators in 'extreme fear' and negative funding rates—Lee remains bullish on Bitcoin, reiterating a price target of $200,000–$250,000 by the end of 2026. He believes the traditional four-year halving cycle's influence may be waning, giving way to a longer, institutionally-driven phase fueled by spot ETFs, regulated access, and deeper capital participation.
Separately, Lee also predicted a 'V-shaped recovery' for Ethereum, which has fallen 60% from its peak and is trading near $2,000. He noted that such steep declines have occurred eight times since 2018 and have historically been followed by rapid price recoveries. This outlook comes as investment firm Bitmine, backed by Founders Fund and ARK Invest, purchased an additional $80 million worth of Ethereum, bringing its total holdings to 3.6% of the entire token supply with an aim for 5%. Bitmine is currently sitting on roughly $6.6 billion in unrealized losses from its Ethereum investments.
Lee identified several potential catalysts for the next leg higher, including continued institutional adoption, steady ETF demand, growing political acceptance of crypto in the U.S., and an expected shift toward Federal Reserve rate cuts in 2026.
