Is a Super-Cycle Coming? Tom Lee Expects BTC to Rally with Metals as ETFs Heat Up

TradingKey - U.S. spot Bitcoin ETFs ended a five-day streak of net outflows as capital begins to flow back; it may just be a matter of time before cryptocurrencies rally, as Tom Lee suggested.

On Monday, January 26 (ET), U.S. Bitcoin (BTC) spot ETFs snapped a five-day streak of net outflows, recording a net inflow of 78 Bitcoins, totaling $6.8 million. Over the past five U.S. trading days, cumulative net outflows exceeded 18,000 Bitcoins, or approximately $1.6 billion.

Capital flows for U.S. spot Bitcoin ETFs, Source: CoinGlass

From January 16 to January 25, Bitcoin prices pulled back by over 10%, with a cumulative drop of about $10,000, falling from above $95,000 to near $85,000. Yesterday, Bitcoin's price halted its decline and rebounded, rising by more than $3,000 to its current price of $88,431.

Bitcoin price chart, Source: TradingView

Capital flows for U.S. spot Bitcoin ETFs have become a key indicator for Bitcoin price movements. When there are net inflows into U.S. spot Bitcoin ETFs, Bitcoin's price rises; conversely, the price falls. Although Bitcoin's price is influenced by U.S. capital, its correlation with U.S. stocks has weakened, no longer tracking the gains of the three major U.S. indices and significantly underperforming precious metals.

Year-to-date, spot gold (XAUUSD) has surged nearly 18%, breaking the $5,000 milestone and recording its best historical performance; silver (XAGUSD) skyrocketed 54%, surging past $110 and also hitting a record high. However, Bitcoin's gains this year are less than 1%.

According to Matrixport, central bank actions are a major factor behind the divergence between Bitcoin prices and precious metals. Matrixport noted in a report that "the continued accumulation of gold by central banks (particularly the People's Bank of China) not only drives gold prices higher, but this allocation preference may also lead to capital being diverted from Bitcoin."

However, Tom Lee, Chairman of BitMine, believes Bitcoin's price will play catch-up. Lee stated in a post, "The parabolic and sustained rise in gold and silver is masking the continued strengthening of the underlying fundamentals of crypto assets, particularly Bitcoin and Ethereum. When fundamentals continue to trend toward the upper right, a price rally is only a matter of time."