Renowned analysts Tom Lee and Raoul Pal see a cryptocurrency rebound on the horizon, suggesting the worst of the downturn is over.

Table of Contents Tom Lee, who co-founded the investment research company Fundstrat, believes the cryptocurrency sector has already navigated through the majority of its bearish territory. He shared these insights during a conversation on Fundstrat’s research platform. TOM LEE JUST SAID MARKETS ARE ABOUT TO GO PARABOLIC LIKE NEVER SEEN BEFORE: WE WILL HAVE “ONE OF THE BEST 18-24 MONTH PERIODS WE HAVE SEEN IN OUR LIFE” VERY BULLISH 🚀 pic.twitter.com/rwRzUFNmT4 — Vivek Sen (@Vivek4real_) May 2, 2026 Lee explained that approximately half of equity markets alongside the entire cryptocurrency space have already completed what he described as an obscured bear market phase. He referenced significant selloffs in software equities and noted that digital assets mirrored these downward movements due to identical liquidity constraints. He further observed that bearish positioning has swelled to magnitudes typically associated with mid-bear-market conditions rather than standard cyclical peaks. According to Lee, this distinction carries weight because it indicates the bulk of downside pressure has likely already materialized. Lee noted that investor sentiment deteriorated more rapidly than negative news flow. Market participants adopted defensive postures even as forward-looking economic indicators were finding stability. He interprets this divergence as evidence of a possible inflection point instead of the beginning of deeper losses. He distinguished between routine cyclical credit tension and systemic financial risk. The recent turbulence in private credit markets, according to Lee, appears more consistent with standard credit cycle dynamics rather than a crisis comparable to 2008. He suggested major banking institutions could actually gain from this transition. Raoul Pal, who founded Real Vision, expressed a comparable assessment. He cited global M2 money supply reaching record levels, dollar weakness, and strengthening Institute for Supply Management data. “The current move does not look like the end of the cycle but a mid-cycle correction,” Pal said in an interview. Pal also drew attention to the Crypto Fear and Greed Index. The indicator plummeted to 8 and has remained beneath 10 for an unprecedented duration compared to even the 2022 bear market. He interpreted this extreme fear reading as a potential bottom signal rather than a harbinger of additional declines. The sustained nature of this fearful sentiment, he contended, actually increases the probability of a market bounce. Despite these optimistic perspectives, actual capital movements remain negative. Cryptocurrency investment vehicles recorded $445 million in redemptions during the previous week. Ethereum experienced the steepest single outflow totaling $222 million. This represents tangible evidence of continued investor caution. Lee introduced a forward-looking argument centered on artificial intelligence. He suggested that stablecoin payment systems and blockchain-based settlement infrastructure could emerge as the foundational layer that AI agents utilize at meaningful scale. This convergence, he maintained, could channel capital back toward Bitcoin and Ethereum once macroeconomic headwinds subside. Whether a genuine recovery takes hold hinges on the pace of liquidity expansion. It also depends on whether market sentiment continues to trail the actual economic fundamentals. The latest concrete indicators remain the $445 million in weekly redemptions and the Fear and Greed Index resting at 8 — representing its most extreme and prolonged fear reading in recorded history.