Fundstrat’s Tom Lee reiterated his $250,000 Bitcoin target, warning that 2026 could be a “lumpy” year for cryptocurrency adoption and a tumultuous one for broader risk assets, treating any major pullback as a buying window rather than a signal to reduce risk.

On The Master Investor Podcast with Wilfred Frostam in: interview In a Jan. 20 release, Lee said he expects 2026 to ultimately “look like a continuation of the bull market that began in 2022,” but argued that markets first need to digest several developments that could cause a decline large enough to “feel like a bear market.”

$250,000 Bitcoin call holds warning for 2026

Lee pointed to what he described as the “new Fed dynamic,” arguing that markets tend to “test” the novel chair and that a sequence of identification, confirmation and response could catalyze a correction. He also warned that the White House could be “more intentional in picking winners and losers” by expanding the set of sectors, industries and even countries “into the bullseye,” which he said is already evident in gold’s strength.

The third point of contention, he says, is the positioning of AI: the market is still calibrating “how much AI costs,” from energy demand to data center performance, and this uncertainty may persist until other narratives take over.

Pressed by volume, Lee said that for the S&P 500, the decline “could be 10%,” but also “could be 15% or 20%,” potentially resulting in a “year-to-date round trip” before finishing sturdy in 2026. He added that his institutional clients didn’t look aggressively positioned yet, and pointed to leverage as a signal: Margin debt is at an all-time high, he said, but has increased by 39% year-on-year – below the 60% rate he associates with peaks in the local market.

For cryptocurrencies, Lee relied on an explanation of market structure for why gold was outperforming: He said the cryptocurrency tracked gold until October 10, when the market experienced what he called “the largest single deleveraging event in cryptocurrency history,” “larger than what happened in November 2022 around FTX.”

Then, he said, Bitcoin fell by more than 35% and Ethereum fell by almost 50%, breaking the tie. “Crypto has periodic deleveraging events,” Lee said. “It’s really hurting the market makers, and the market makers are basically the central bank of cryptocurrencies. I would say so many market makers that maybe half were wiped out on October 10.”

He argued that this fragility does not negate the framework of “digital gold” but limits whoever treats it as such today. “Bitcoin is digital gold,” Lee said, but added that the group of investors who buy that thesis “is not the same universe that holds gold.”

Lee expects the ownership base to expand over time, although it won’t be sleek. “I think cryptocurrency still has a future adoption curve higher than gold because more people own gold than cryptocurrencies,” he said. “But the road to increasing that adoption rate is going to be very bumpy. I think 2026 will be a really important test because if Bitcoin hits a new all-time high, we know that this deleveraging event is already behind us.”

Against this backdrop, Lee reiterated his confident call for growth: “We believe Bitcoin will reach a new high this year,” he said, confirming the $250,000 target. He linked this thesis to the enhance in the “utility” of cryptocurrencies, banks’ recognition of blockchain settlement and finality, and the emergence of natively scalable financial models.

Lee cited Tether as evidence, saying it was expected to generate nearly $20 billion in profits in 2026 with about 300 employees, and argued that the profit profile illustrated why blockchain-based finance could be structurally different from legacy banking.

Lee concluded with his advice, which deliberately limits short-horizon reflexes. “Trying to time the market makes you an enemy of your future performance,” he said. “While I caution against 2026 and the potential for a lot of turbulence, they should view the pullback as a buying opportunity, not a selling opportunity.”

At the time of publication, Bitcoin was trading at $89,287.

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