In recent appearance on CNBC’s “Squawk Box,” Tom Lee, Fundstrat Capital’s CIO and head of research, suggested that Bitcoin could decline further before it sees a significant recovery. During the January 13 segment, Lee talked about broader market concerns – such as inflation, bond yields and yields – before drawing an analogy to the crypto space, specifically Bitcoin’s trajectory.

Could Bitcoin Fall to $50,000?

“Bitcoin is down about 15% from its highs, which for an extremely volatile asset is a normal correction and following global liquidity. We are at the beginning of a halving cycle,” Lee noted, emphasizing that price swings of this magnitude are common in the digital asset space. He also discussed technical indicators that indicate future volatility, stating: “One level will be $70,000.”

A less likely scenario, but still possible, is a $50,000 collapse. “It could go down to $50,000. But again, this isn’t a new level. This is where it touches before it starts to build up,” Lee noted.

Lee’s perspective paints a picture of a two-pronged price movement for Bitcoin: a potential drop to “$50,000,” followed by a rally that he says could reach “maybe $200,000 or $250,000.” He noted that despite the possibility of a downward move, holders of long-term bonds should not be deterred.

“Bitcoin is something that needs to be focused on for the long term. I don’t think anyone would lose money buying here for $90,000. If they try to time it, they might get lucky and it will be $70,000, but in my opinion Bitcoin could be much higher this year, maybe $200,000 or $250,000. That’s why I think $90,000 is still a great starting point,” said Fundstrat’s CEO.

Lee’s comments came in the context of a broader discussion about market dynamics. The conversation began with the recent decline in stock prices and whether the Federal Reserve’s decision to pause interest rate cuts could scare investors. Lee pointed to the upcoming inflation data as a key turning point, explaining: “We have been making adjustments for almost a month now… I would like to see the CPI fall below 2.5%. In addition to profits, I think it would give the markets a jolt of confidence.”

He then highlighted what he sees as short-lived hype around inflation statistics that have been marred by external events such as hurricanes and wildfires. “Last year’s hurricanes disrupted some of the quality of inflation because, for example, hotel bookings would increase… They will also impact used car prices,” Lee said, adding that once these anomalies disappear, overall inflation could decline.

Discussing Federal Reserve policy, Lee maintained a balanced stance, saying: “I think the best solution is for the Fed to make one cut because the economy is strong enough and policy is still dovish… They will move to neutral.” If they push the cuts into 2026 and 2027, that will be a longer rate that will support markets.” He believes markets remain sensitive to political uncertainty, especially under the novel administration.

Asked if stocks were overvalued, Lee compared them to bond yields: “For me, a 10-year bond, even if it goes to 5%, is a multiple of 20 PE for a 10-year bond… The median PE is 17 times.” I think stocks are a much better value than bonds right now.

At the time of publication, the BTC price was $95,618.

Featured image created with DALL.E, chart from TradingView.com