Fundstrat’s head of research, Tom Lee, has told investors to prepare for a rough opening to 2026 before conditions improve later in the year. He warned that political friction and tariff talk could trigger meaningful setbacks for both stocks and Bitcoin, even as blockchain and AI remain long-term strengths.

Tom Lee’s Call And The Near-Term Picture

Lee said a more dovish stance from the US Federal Reserve and the end of quantitative tightening set the stage for gains later on.

He put a possible market correction in the mid-teens range, estimating a pullback of about 15% to 20% at one stage.

He pointed to geopolitics — including renewed tariff threats — and rising political divides as brakes on an immediate, broad rally. Reports note he still expects a late-year rebound if policy eases and liquidity returns.

Reports say the White House’s selective support for certain industries could tilt which sectors lead the recovery.

2026 is shaping up to be similar to 2025:

– good fundamentals – tariff escalations and White House picking “winners and losers” – political divisiveness – tailwinds from AI and blockchain BUT: dovish Fed now and QT over

And so a painful decline may lie ahead but we would… https://t.co/7Mp3rcOcP1

— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) January 20, 2026

Deleveraging Still Hitting Crypto Liquidity

Lee argued that recent squeezes have left crypto markets fragile. Market makers have been weakened by repeated forced exits, and that has made price moves jumpier.

He also noted that a fresh Bitcoin all-time high would be an important signal that the market has worked through those stresses, though he didn’t repeat earlier extreme price targets in his latest remarks.

Reports stress the difference between a technical bounce and a move backed by wider adoption and deeper institutional flows.

Despite warnings that a painful decline may still unfold, some investors are not backing away entirely. Reports say parts of the market continue to view sharp pullbacks as buying chances rather than exit signals.

Even with uncertainty around tariffs and global politics, Lee and his camp believes disciplined dip buying — spread out over time — offers better odds than trying to time a perfect bottom while fear dominates headlines.

“And so a painful decline may lie ahead but we would ‘buy the dip'”, Lee said in an X post.

Reports indicate that more than $1.8 billion was liquidated over a 48-hour stretch as bitcoin lost ground.

Bitcoin sank to roughly $88,500 during the slide, and Coinglass data showed the bulk of wiped positions were longs — a sign that traders had been positioned for higher prices.

The selloff erased gains made earlier in the year and pulled crypto capitalization sharply lower, in one of the biggest drops since mid-November.

Featured image from Allrecipes, chart from TradingView

Bitcoin and the altcoins have plummeted during the past day, leading to the liquidation of a large amount of crypto longs in derivatives markets.

Crypto Sector Has Seen A Notable Amount Of Liquidations In The Last Day

According to data from CoinGlass, the past day’s volatility in the crypto market has been accompanied by a swath of liquidations. The “liquidation” of a contract occurs when it accumulates losses of a certain degree and is forcibly shut down by the exchange. In the digital asset sector, volatility tends to be high, so a large number of liquidations take place on a regular basis. The last 24 hours involved one such volatile event, as the table below depicts.

In total, the crypto market has faced $874 million in liquidations within this window. Out of these, long contracts have made up for an overwhelming share: $788 million.

The reason for liquidations being this lopsided naturally lies in the price action that has developed over the last day. Bitcoin saw a sudden drop from $95,500 to a low of $93,000, while Ethereum went from $3,350 to $3,200. In percentage terms, these drops aren’t too big, but the rapid nature of them is what triggered the liquidations.

The source of the crash could lie in revitalized US-EU tariff tensions. As reported by Reuters, President Donald Trump vowed over the weekend to implement tariffs on eight European nations.

Starting February 1st, goods from Denmark, Great Britain, Norway, Sweden, France, Germany, the Netherlands, and Finland will face an additional 10% import tariff. If the US isn’t allowed to acquire the Danish territory of Greenland, these tariffs will go up to 25% on June 1st.

2025 already saw several events where tariff-related uncertainty affected the crypto market, so it’s not surprising to see that the latest news has also been accompanied by volatility. As is usually the case, the latest market volatility has led to Bitcoin-related contracts occupying a disproportionate share of liquidations.

As is visible in the above heatmap, Bitcoin has seen liquidations of around $233 million in the past day. Ethereum, the next-ranked coin in this category, has witnessed $156 million in contracts being involved.

From the altcoins, Solana, XRP, and Dogecoin have ranked the highest with $61 million, $41 million, and $35 million in liquidations, respectively. SOL being ahead of XRP despite being smaller in market cap may be because of its 6% plunge being larger than the latter’s 4% drop.

Bitcoin Price

Bitcoin has seen a slight rebound from its low as the cryptocurrency’s price is now back at $93,100.