Fundstrat
Tom Lee: Crypto Sell-Off & Can Tech's Run Keep Up Into 2026?
11/5/2025, 10:28:17 PM
Economic Summary
- Funding and liquidity dynamics matter: a sharp SOFR drop and month-end window dressing, combined with Treasury General Account cash buildup from the government shutdown, have tightened liquidity and contributed to market stress across assets.
- Crypto deleveraging continues: the Oct 10 unwind was the largest in history, producing multi-week ripple effects, protocol losses and hacks (e.g., Balancer-related), though Tom Lee sees no widespread systemic failures yet.
- Cross-asset linkages growing: market makers trade both crypto and equities, increasing correlations; volatility in crypto can spill into Nasdaq/QQQ, particularly when stocks are overbought.
- A.I. valuation context: MAG-7 and leading A.I. names (notably NVIDIA/NVDA) are supported by double-digit growth, with NVDA around 29x forward earnings, suggesting relative reasonableness despite concentrated leadership.
- Historical nuance for equities: after six months of gains, November outcomes historically range from flat to modestly positive, so a short-term wobble rather than a sustained decline is plausible.
Bullish
- Resolution of shutdown/liquidity issues could turn headwinds into tailwinds for crypto.
- Top A.I. names still show strong growth and reasonable forward multiples.
- Mean-reversion buying potential in long-underperforming stocks.
Bearish
- Bitcoin broke below its 200-day moving average, signaling technical weakness.
- Funding stress in SOFR and Treasury window-dressing amid the government shutdown.
- Large deleveraging events in crypto (Oct 10) with ongoing ripple effects and hacks.
- Stocks may be vulnerable after six consecutive months up and stretched A.I. valuations.
Bullish tickers
NVDABTCQQQ
Bearish tickers
BTCFTXBALQQQ
BTC
Bullish
Could rebound if shutdown/liquidity issues resolve and risk appetite returns.
Bearish
Broke below the 200-day moving average; sensitive to liquidity and deleveraging events.
QQQ
Bullish
A short-term wobble is more likely than a prolonged decline; historical Novembers can be flat or positive.
Bearish
Linked to crypto volatility via market makers; vulnerable after six months of gains.
NVDA
Bullish
Supported by strong growth and visibility; ~29x forward earnings seen as reasonable for its growth profile.
Bearish
Concentration risk from A.I. trade could pressure the name if sentiment shifts.
FTX
Bullish
No bullish case discussed; referenced historically as an example of systemic crypto stress.
Bearish
Mentioned as part of past crypto collapses (2022) that precipitated wide deleveraging.
BAL
Bullish
No explicit bullish view given; recovery would depend on broader DeFi confidence restoration.
Bearish
Balancer-related hack cited as a catalyst for recent crypto losses and confidence erosion.
People mentioned
Tom LeeKatie StocktonMorgan