Tom Lee Prediction 2026: Market May Fall 10–15% Before Major Comeback

Tom Lee Prediction 2026 Highlight Fed Cuts, Market Dip, Asset Recovery

Highlights:

• Tom Lee says 2026 marks the true market expansion after three years of suppression.

• He expects a 10–15% correction in early 2026, followed by a strong recovery.

• AI growth and Bitcoin adoption remain key drivers of the next bull phase.

Tom Lee Prediction 2026: Global markets are on the verge of a long-delayed expansion. After nearly three years of economic suppression caused by shocks and policy tightening, he expects 2026 to mark a true reset—despite near-term volatility.

Source: Wu Blockchain X

Markets Have Been Suppressed by “Extinction-Level” Events

According to Tom Lee, co-founder of Fundstrat and chairman of Bitmine, markets have not experienced a normal business cycle since 2020. Rather, they have been burdened with numerous overlapping shocks, such as the post-COVID effect, violent Fed tightening, geopolitical tensions, supply-chain failures, and regulatory ambiguity.

Lee refers to them as the extinction-level events that smothered corporate confidence and frozen investment appetite. Though the economy kept growing, it was not taking risks and was not optimistic, as would be typical of the opening phases of an expansion, known as animal spirits.

Source: YouTube

Why 2026 Marks the Real Business Cycle Restart?

Lee argues that the real business cycle does not begin until interest rates fall meaningfully and earnings growth accelerates. In his view, those conditionswille finallalignng in 2026.

He expects the Federal Reserve's delayed response to easing inflation to remain a headwind early in the year. As a result, Lee forecasts a 10–15% market correction in the first half of 2026, similar to the pullbacks seen in 2025. However, he sees this as a temporary adjustment rather than a trend reversal.

Bearish First Half, Bullish Second Half

Although Lee anticipates short-term weakness, he is very optimistic about the bigger picture. He feels that 2026 will be a repeat of 2025, initially a downside, and then a sharp recovery once the support of the policy is more evident.

According to Lee, the resurgence of the so-called Fed put, as well as pro-business regulatory signals emitted by the White House, are among the factors that triggered the revival of risk appetite. In the past, markets have been strong during the years after the Fed rate cut hike cycles, which supports his optimistic view of the second half of the year.

Source: YouTube

AI and Bitcoin at the Expansion Phase.

Tom is still optimistic that artificial intelligence will be one of the main engines of the next growth. Although the present AI valuations might be far-fetched, he suggests that disruptive technologies are always costly until the profits are fully realized.

He is also still optimistic about Bitcoin price prediction, and he considers the recent volatility as a liquidity-induced phenomenon instead of a structural failure. As adoption remains in its infancy and leverage has been flushed, Tom is confident that crypto assets are in a good position to enjoy a decline in rates and an institutional revival.

Conclusion

The 2026 re-interprets the existing uncertainty as the last stage of oppression instead of the beginning of the decline. Although initial volatility might challenge investors, declining rates, AI-based earnings, and recovered confidence may open the door to strong growth.

Disclaimer: The article is informational and is not financial or investment advice. Financial markets and cryptocurrency are very volatile. Financial decisions should be made by the readers themselves or with the help of professionals.