What if the next 50% drawdown in Bitcoin is the last great buying window before an institutional melt-up? Fundstrat’s Tom Lee just warned that BTC can still crater hard—even in a bull market—while keeping his ultra-bullish call alive. The message for traders: expect turbulence, but prepare to use it.

What’s happening

Tom Lee cautions that Bitcoin’s volatility mirrors broader equities and can still deliver steep corrections. He frames potential selloffs as a normal feature of long-term uptrends, not a bug. At the same time, he remains constructive into late 2025, citing growing institutional demand, tokenization tailwinds, and ETF-driven participation. Recent context: BTC briefly slipped below $105,000 on a flash move, then rebounded above $110,000 as softer U.S. inflation improved risk appetite. Meanwhile, altcoins are seeing renewed activity, with record-high futures volumes signaling a rotation while Bitcoin consolidates.

Why this matters for traders

- A credible bull (Lee) is acknowledging the possibility of a major dip while staying long-term bullish—classic late-cycle volatility behavior. - Large drawdowns in uptrends often reset leverage, offer better entries, and set the stage for higher highs. - Institutional flows and RWA/tokenization narratives strengthen the medium-term setup, but macro still drives near-term swings.

Market context to watch

- Macro prints: inflation cooldown supported the bounce; upcoming CPI/PCE and jobs data can shift risk quickly. - Flows and positioning: ETF net flows, funding rates, and OI spikes can foreshadow squeeze risk. - Rotation dynamics: Binance altcoin futures volumes suggest traders are seeking higher beta while BTC ranges. - Miners and AI/HPC: miner equities are reacting to AI/HPC narratives—watch miner selling and hash price trends for BTC supply pressure.

Actionable playbook

• Plan for pain: Predefine levels where you scale in (e.g., staged bids every 10–15% lower), not after the candle prints.
• Hedge the tail: Consider protective puts or short-perp hedges sized to portfolio beta during event-heavy weeks.
• Use volatility: Sell covered calls or put spreads when IV spikes to monetize fear, keeping risk tightly defined.
• Respect liquidity: $100,000 is a psychological magnet—expect wicks. Use limits, not market orders, in fast tape.
• Rotate with rules: If playing alts, target high-liquidity names, reduce size, set hard invalidations, and avoid chasing vertical moves.
• Track signals: Watch ETF flows, stablecoin net inflows, funding skew, and the VIX; rising equity vol tends to bleed into BTC.

Key opportunity

If a sharp correction hits, treat it as a structured accumulation window rather than a surprise. The combination of institutional participation, improving macro, and tokenization momentum supports the medium-term thesis—but entries and risk control will decide P&L.

Bottom line

Lee’s dual message—brace for volatility, stay aligned with the higher-timeframe uptrend—is your edge. Build your plan now: where to buy, how to hedge, when to rotate, and what signals to follow. Execute it when the market gets loud.

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