Tom Lee Sees 10% To 15% Crypto Pullback In Early 2026 As White House, Fed Policy Risks Loom

Tom Lee, CEO of BitMine Immersion Technologies, warned in a recent interview that a 10% to 15% pullback in crypto markets is likely in early 2026. He attributed this potential decline to growing macroeconomic and policy risks, particularly from the White House and the Federal Reserve. Despite long-term optimism about digital assets, Lee emphasized that volatility remains a key feature in the short term according to reports.

The Fed's decision-making in 2026 will play a central role in shaping crypto sentiment. In 2025, the central bank implemented three 25-basis-point rate cuts, and market participants remain divided on whether additional reductions will occur early in 2026. Rate cuts typically benefit risk assets like Bitcoin by making traditional investments less appealing. However, uncertainty surrounding the Fed's stance has contributed to investor caution.

In addition to monetary policy, regulatory developments at the White House and across Congress are also influencing the market. New laws and oversight frameworks are emerging to clarify the jurisdiction of agencies like the SEC and CFTC over digital assets. These reforms, while intended to bring clarity, have introduced new layers of complexity for market participants.

Why Did This Happen?

The potential pullback Lee described comes amid a period of market consolidation following a sharp peak in October 2025. Bitcoin reached an all-time high of $126,080 on October 6 before dropping to $88,439 by the end of the year. The Crypto Fear and Greed Index remained in fear territory for much of December, reflecting declining investor confidence.

Lee highlighted that the market is still in an early stage of adoption. He noted that only about 4 million Bitcoin wallets hold more than $10,000, compared to 900 million global IRA and brokerage accounts at that level. This disparity suggests significant room for growth but also means that crypto remains vulnerable to macroeconomic shocks.

How Did Markets React?

Market participants are closely watching the U.S. Dollar Index, which has fallen due to declining rate expectations and weak labor data. A weaker dollar typically supports precious metals like gold and, by extension, risk assets like Bitcoin. The current environment has led to renewed interest in Bitcoin and other cryptocurrencies as investors seek higher returns amid low-yield environments according to analysis.

However, ETFs and institutional products linked to Bitcoin have seen record outflows in late 2025. U.S.-listed spot Bitcoin ETFs collectively saw $4.57 billion in redemptions during November and December. This trend reflects broader uncertainty and a shift in risk appetite among investors.

What Are Analysts Watching Next?

Looking ahead, investors are monitoring key economic indicators, including inflation, labor data, and consumption trends. These metrics will help determine the Fed's policy path and, by extension, the trajectory of crypto markets. Analysts also expect the White House and Congress to play a growing role in shaping the regulatory landscape. The CLARITY Act, set to clarify taxation and issuance guidelines for digital assets, is one such development.

The outcome of the 2026 U.S. midterm elections is another critical factor. A change in political control could delay or alter current crypto legislation. Market participants are watching for signs of bipartisan support for regulatory clarity, which could provide a more stable environment for crypto innovation according to analysis.

Bitcoin's price action and on-chain activity will also be key indicators in 2026. Some analysts expect a range-bound market in the early part of the year, with prices oscillating between $65,000 and $75,000. Others are more optimistic, predicting a return to previous highs by early 2026 according to analysis.

Lee remains bullish on the long-term prospects of crypto and AI, which he views as dominant, structurally strong trades. While short-term volatility is expected, he sees a strong recovery following the initial turbulence, with policy support from both the Fed and White House likely to re-emerge. This view aligns with broader market narratives that see digital assets as part of a larger transformation in finance and technology according to reports.