Tom Lee warns of early 2026 market decline before year‑end recovery

Fundstrat head of research Tom Lee warned investors to brace for a "painful decline" across the crypto and stock markets in 2026, before a recovery toward the end of the year, he said in an interview on The Master Investor Podcast with Wilfred Frost. Lee said 2026 will mirror 2025 with tailwinds for the blockchain and AI industries, but that risks from tariffs and political divides would initially hold the market back from a sustained rally.

He estimated a stock market correction of 15% to 20% this year and added, "I think we really finish the year strong," citing a more dovish US Federal Reserve and the conclusion of quantitative tightening last year. He also said the White House picking "winners and losers" may influence which sectors outperform.

On Bitcoin, Lee said he still expects a new all‑time high this year but did not repeat a prior $250,000 price prediction. He said deleveraging has hurt the crypto market and argued a new Bitcoin high would show the Oct. 10 deleveraging event is behind the market. Lee noted deleveraging cycles have partly driven crypto's divergence from gold and can severely impair market makers, whom he described as the "central bank of crypto." He said disruptions will continue until crypto sees broader mainstream adoption and more institutional support.

Lee tipped energy and basic materials as potential winners in 2026 and recommended including gold in a portfolio.

Key Topics

Crypto, Tom Lee, Bitcoin, Fundstrat, Federal Reserve, Gold