Following a volatile few weeks across the crypto landscape, a fresh wave of optimism is stirring from unlikely places. The cryptocurrency market, led by Bitcoin (BTC), Ethereum (ETH), and XRP, has endured a series of setbacks since October—but if historical patterns and macro signals are any guide, the stage may now be set for a powerful year-end rebound.
One of the few voices of calm amid the recent turbulence is Tom Lee, co-founder of Fundstrat Global Advisors. Known for his long-term bullish stance on digital assets, Lee believes that a constellation of macroeconomic and technical factors are aligning just in time for a December rally. His thesis: the worst of the shakeout is behind us, and the market may be entering an ideal setup for a reversal that could catch many off guard.
The Case for Optimism: Policy Reversal and Market Mechanics
While crypto’s price action can often feel driven by chaos, Lee argues that behind the scenes, monetary policy is quietly becoming supportive. With inflation moderating and economic data softening, the U.S. Federal Reserve is widely expected to pause rate hikes in December—and may even signal rate cuts in early 2026. But perhaps more crucial is the quiet termination of Quantitative Tightening (QT), the Fed’s long-standing practice of shrinking its balance sheet.
Historically, such liquidity shifts have had enormous impacts on risk assets. In September 2019, when the Fed ended QT, both equities and crypto bounced strongly. Lee draws a parallel to that moment, suggesting that halting balance sheet contraction now introduces upward pressure, particularly on high-beta assets like Bitcoin. As he put it, “The end of QT is an invisible tailwind. Markets don’t react overnight—but they notice.”
Reset and Rebuild: What November’s Washout Signals
In Lee’s view, recent price weakness did something useful: it purged excesses. The October-November selloff wasn’t just about sentiment—it was about leveraged positions unraveling across the crypto derivatives market. Dozens of over-exposed positions were liquidated, wiping billions in margin from centralized exchanges.
This kind of deleveraging is often painful, but necessary. “When you remove bad positioning,” Lee says, “you create space for organic rallies.” He compares it to early 2023, when crypto rallied after the FTX crash hangover—a process that took several weeks of consolidation. This time, he argues, that reset phase may already be complete.
A Seasonal Surge? December’s Psychological Edge
December has long held an allure for investors. Equities frequently post gains in the final month of the year—driven largely by window dressing, year-end performance anxiety, and holiday optimism. Crypto, with its even faster reflexes and global investor base, often amplifies this pattern.
Fund managers who exited positions during the November slide now face the risk of underperformance if crypto stages a recovery. That fear often produces FOMO: a fear of missing out that leads to rushed entries in the final weeks of Q4. As a result, Lee believes we’re entering a pocket of seasonal strength, where positioning dynamics—not just fundamentals—could drive an unexpectedly sharp move higher.
Bitcoin, Ethereum, and XRP: Setup and Sentiment
All eyes are, of course, on the technicals. Bitcoin has been hovering in a tight range, with $36,000 acting as a floor in recent sessions. A breakout above $38,000 could trigger a reassessment of risk across the market. Ethereum lingers below $2,000, but on-chain activity continues to build, particularly around NFTs and DeFi. XRP, meanwhile, has quietly outperformed on several volume indicators, suggesting accumulation by institutional players.
Analysts tracking sentiment indicators point to a neutral-to-negative bias among retail investors, which is often a contrarian buy signal. Glassnode and Santiment data reveal that social engagement has dipped, while long-term holder confidence remains stable. This divergence between perception and positioning is precisely the kind of setup Lee has highlighted over the years.
A Rally That Would Surprise Everyone—Except the Charts
If Tom Lee is right, what comes next is less a moonshot and more a recalibration. After months of uncertainty, the crypto market may now hold more upside potential than most realize. The stars are quietly aligning: monetary policy is easing, excess risk has been flushed out, and year-end psychology could soon become a powerful accelerant.
Of course, nothing is guaranteed in crypto. But if there’s one lesson from 2023’s uneventful start and explosive summer reversal, it’s that Bitcoin loves to move when the crowd least expects it. December 2025 may just be another chapter in that ongoing—and unapologetically volatile—story.
Source: Coinpedia – Tom Lee Reveals Why Bitcoin, Ethereum and XRP Are Preparing for Year-End Rally
