‘Painful dip’ before gains? Fundstrat’s Tom Lee flags 2026 market turbulence

Tom Lee, the founder and head of analysis at Wall Road agency Fundstrat, foresees a bumpy and “painful” begin for markets in 2026. In a current podcast, Lee reiterated that 2026 could appear to be 2025, citing tariff escalations, Fed independence, and different catalysts. 

Lee added that Jerome Powell’s substitute as Federal Reserve chair might additionally have an effect on markets. 

“The market all the time assessments a brand new Fed. The method of figuring out, confirming, plus the market take a look at can create a correction.”

Taken altogether, he concluded, 

“2026 is shaping as much as be much like 2025. So a painful decline could lie forward, however we’d ‘purchase the dip.”

For perspective, the U.S tax season and April 2025 tariffs dragged Bitcoin’s [BTC] value down by 11%. It dropped from $84k to $74k. Nevertheless, it later rallied to $126k by October, solely to erase the whole lot in late 2025.  

Right here, it’s value mentioning that the market solely recovered in Q2 2025 after key tariff offers with China and different international locations had been reached.

It additionally should be stated that at press time, U.S. President Donald Trump had stated {that a} deal on Greenland was shut. This prompted the cancellation of proposed tariffs and a short market aid. Therefore, the query – Is it sufficient for a possible BTC rebound? 

Consolidation or capitulation forward for BTC?

On the time of writing, Bitcoin’s value was barely holding $90k. It was down 10% from final week’s excessive of $98k, triggered by tariff jitters.

Nevertheless, macro threat, together with Japan’s bond market disaster, could maintain BTC in a value vary, in response to analytics agency Swissblock. In doing so, it cited its proprietary Bitcoin Danger Index (BRI). 

The BRI surged to 21 and was simply shy of the Excessive Danger zone of 25 – Marking the present consolidation that started in November. 

Supply: X/Swissblock

Swissblock added, 

“The bullish case: If this assist holds within the quick time period, we might see a transparent push towards targets at $94.8k and probably $99k. The bearish case: If sellers handle to consolidate value motion beneath $89.2k, the subsequent line of protection for consumers sits at $84.5k.”

That stated, institutional demand for BTC through U.S Spot BTC ETFs has cooled off currently. Bitcoin’s value has been intently correlated with ETF inflows. In late 2025, ETFs had been internet sellers however reversed and have become internet consumers in early January 2026. This lifted it to $98k.

Nevertheless, institutional flows have since stagnated close to the impartial stage, indicative of a pause within the current restoration as gamers digest the macro panorama and geopolitical tensions. 

Supply: CryptoQuant

Closing Ideas

• Tariffs and a brand new Fed chair might roil the markets in early 2026, in response to Tom Lee. 
• Institutional flows improved in early January, however they’ve since stagnated.