After the biggest crypto deleveraging in five years, a respected market strategist is calling for a late-year pivot that could set up a powerful move into 2025. Tom Lee sees a cleaner market after the flush, potential tailwinds from Fed rate cuts, and surging Ethereum stablecoin activity across L1/L2 as catalysts. If positioning remains light while liquidity improves, the path of least resistance into year-end may surprise the consensus.

What just happened — and who’s calling it

Tom Lee (Fundstrat Research, Chairman at Bitmine Immersion Technologies) anticipates a bullish year-end setup for Bitcoin and Ethereum, extending into 2025. His thesis: October’s outsized liquidation reset leverage, reducing open interest and fragility; meanwhile, ongoing or anticipated Fed rate cuts historically ease financial conditions and boost risk assets. On-chain, Ethereum stablecoin flows are driving measurable activity on L1 and L2, supporting the case for stronger network usage and fees.

Why this matters to traders

- A leverage reset often precedes more durable trends as weak hands exit and funding normalizes. - If rates drift lower, duration-sensitive and risk assets (including BTC/ETH) tend to re-rate higher. - BTC’s behavior during the flush reinforced its store-of-value narrative; ETH’s usage story is underpinned by stablecoin transfer velocity on L2s. - Cleaner positioning can amplify moves if fresh spot demand arrives into thinner resistance.

Key signals to watch

• Open interest vs. price: Rising price with contained OI is healthier than price + spiking OI (which signals chasey leverage).
• Funding and basis: Neutral-to-slightly negative funding during up moves = constructive spot-led demand.
• Stablecoin supply/flows: Growth in USDT/USDC supply and on-chain transfer volume, especially on ETH L2s.
• Liquidity + breadth: Depth on spot order books; breadth of L2 activity and gas usage trends.
• Macro tape: Fed communication, inflation prints, and USD strength (DXY) for risk-on/off cues.
• Options skew: Softening downside skew and improving call demand can foreshadow squeeze dynamics.

Actionable playbook for the year-end window

• Favor spot-led entries on pullbacks when funding cools and OI contracts after up days; avoid chasing high-funding breakouts.
• Stage entries in tranches and predefine invalidation (time-based or structure-based) to control risk.
• Track ETH activity via stablecoin throughput and L2 metrics; consider relative strength rotations when ETH outperforms on rising fees/usage.
• Hedge event risk (Fed meetings, CPI, jobs data) with collars or reduced gross exposure into prints.
• Set alerts for OI spikes, funding flips, and dollar index surges that can reverse risk appetite.

Risks that could derail the bull case

• Sticky inflation or hawkish surprises delaying/undoing cuts.
• Leverage rebuild too fast, inviting another sharp liquidation.
• Regulatory shocks impacting exchange liquidity or stablecoins.
• Technical setbacks on L2s or stablecoin market stress reducing ETH throughput.

Bottom line

With leverage cleaned up, potential easing tailwinds, and ETH stablecoin activity rising, the probability of a year-end push has improved. It’s not a guarantee—edge comes from disciplined execution and data-driven confirmation. Build a watchlist, track the signals above, and let the tape invite you in rather than forcing entries.

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