Fundstrat's co-founder and market strategist Tom Lee remains calm even when markets get shaky. And despite a bumpy start to December, he predicts Bitcoin, Ethereum, and the overall crypto market are gearing up for a strong year-end move.
Two weeks ago, Lee warned that markets could face turbulence before turning higher — and that is exactly what happened. Now, he says the setup for a December rally is stronger than ever.
Why Tom Lee Thinks a Crypto Rally Is Coming
The Federal Reserve Is Turning Supportive
According to Lee, the biggest catalyst for both stocks and crypto is monetary policy.
- •The Fed is expected to cut interest rates in December.
- •Quantitative Tightening (QT) has officially ended, a process where the Fed had been shrinking its balance sheet since April 2022.
- •The last time QT ended, in September 2019, markets rallied more than 17% in just three weeks.
Lee says the end of QT effectively marks the beginning of a liquidity boost, similar to early Quantitative Easing (QE). More liquidity usually means more demand for risk assets like Bitcoin, Ethereum, and XRP.
November’s Market Reset Cleared Excess Leverage
Lee points out that November’s drop wasn’t just normal volatility; it was a major reset of leverage, especially in crypto.
- •Crypto saw a “wipeout” of overleveraged positions in October and November.
- •Similar events in the past, like the FTX collapse in 2022, took multiple weeks for sentiment to recover.
- •Lee believes crypto is now 7–8 weeks past the shock and “fully washed out.”
This cleansing of leveraged positions, he says, builds the foundation for a healthier uptrend.
Seasonal Strength and Year-End FOMO
Historically, December is one of the strongest months for both equities and crypto.
Lee says many fund managers became extremely cautious after November’s sell-off, and now risk being left behind if markets bounce. This creates performance chasing, which often pushes prices higher in the final weeks of the year.