What does Tom Lee mean by a “hidden bear phase” in crypto?

Tom Lee says crypto already went through a downturn driven by liquidity tightening, even if prices didn’t fully collapse. This “hidden bear” reflects declining sentiment, reduced liquidity, and sharp drawdowns in related sectors like tech.

Why does Tom Lee think crypto may be near a bottom?

Lee points to heavy short positioning and bearish sentiment, which are typically seen at market bottoms. When too many investors turn negative, markets often move higher to catch traders offside.

How are software stocks connected to crypto in this analysis?

Lee notes that software stocks have already fallen sharply, and crypto followed a similar pattern. Both sectors are sensitive to liquidity, so their declines suggest a broader macro-driven correction.

What is Raoul Pal’s view on the current crypto cycle?

Raoul Pal sees the current phase as a mid-cycle correction, not the end of the bull market. He believes improving liquidity conditions could support another upward move.

What macro signals suggest crypto could recover?

Key signals include rising global M2 money supply, a weakening US dollar, and improving economic indicators. These factors typically support risk assets like crypto.

What does the Crypto Fear and Greed Index indicate right now?

The index has stayed at extremely low levels, showing strong fear in the market. Historically, this level of fear can signal a potential reversal rather than continued decline.

Is this outlook bullish or bearish for crypto investors?

It leans bullish, as both Lee and Pal suggest the worst of the downturn may already be over. However, this is an interpretation of current data, not a guaranteed outcome.

What role does liquidity play in crypto price movements?

Liquidity—how much money is flowing through the financial system—strongly influences crypto prices. When liquidity rises, more capital can enter risk assets, often pushing prices higher.

Tom Lee says crypto already saw hidden bear

Written by Mahathir BayenaPublished May. 4 2026Last Updated May. 4 2026

Crypto markets may have already passed through a “hidden bear phase” driven by liquidity withdrawal, according to Tom Lee.

Lee said both crypto and software stocks experienced sharp drawdowns, with short positioning now at levels typically seen near market bottoms rather than cycle peaks.

“I don’t think it’s the end of the cycle. I think it’s a mid-cycle correction,”

Said Raoul Pal, pointing to improving global liquidity conditions.

Lee argued that investor sentiment has turned overly bearish, which historically signals potential upside as markets tend to move against consensus positioning.

He highlighted that global liquidity indicators, including rising M2 money supply and a weakening US dollar, suggest macro conditions are beginning to improve.

The Crypto Fear and Greed Index has remained at extremely low levels, reinforcing the view that markets may be closer to a reversal than a deeper downturn.

Lee added that structural trends such as artificial intelligence and tokenisation could drive future demand for blockchain networks like Bitcoin and Ethereum.

The outlook suggests that if liquidity continues to expand, crypto markets could transition from consolidation into the next growth phase.

At the time of reporting, Bitcoin price was $78,868.71.