Analysts are beginning to point to subtle but promising shifts across both macro and on-chain data – signs that could hint at the start of a late-year recovery.

The conversation has been reignited by Fundstrat’s Tom Lee, who told CNBC this week that both the stock and digital asset markets appear to be entering a period of stabilization following one of the largest liquidation events in years.

The Market’s “Reset” Moment

October’s first half brought widespread panic across crypto exchanges. A sudden surge in liquidations on October 10 – partly sparked by renewed tensions between Washington and Beijing – erased billions of dollars from the market in a matter of hours.

But unlike previous downturns, this time the damage appears contained. Bitcoin’s drawdown barely reached 4%, a surprisingly shallow dip given the scale of leveraged positions that were wiped out. Ethereum also showed resilience, bouncing back quickly from its early-month lows.

Analysts describe this as a “reset moment” – the point where overextended positions are cleared, volatility subsides, and healthier trading behavior begins to return.

Shifting Indicators Point Toward Recovery

Data from futures markets supports that narrative. Open interest – a measure of the total number of active contracts – has fallen to its lowest level in several years. Historically, that has coincided with local bottoms in both Bitcoin and Ethereum.

At the same time, momentum indicators across major assets are flipping green. Lee described this as a textbook setup for a short-term rally. “You have low leverage, positive technicals, and a market that’s already priced in bad news,” he said. “That’s exactly what precedes a rebound.”

Institutional Signals Strengthen the Case

Adding to the optimism are signs that traditional finance is warming again to crypto exposure. JPMorgan’s initiative to let institutions use Bitcoin and Ethereum as collateral – a symbolic milestone for mainstream acceptance – has been cited by analysts as evidence of a deeper integration between Wall Street and digital assets.

This trend could accelerate if the Federal Reserve follows through with additional rate cuts later this year. Looser financial conditions historically benefit speculative assets, but Lee argues the setup now favors more mature ones, like Bitcoin and Ethereum, which he views as “macro assets rather than tech bets.”

Bitcoin as the New Barometer of Confidence

Bitcoin’s stability during recent turmoil has led some investors to view it as a test case for how digital assets perform under stress. In past years, cascading leverage often triggered price collapses of 20% or more. This time, the reaction was muted – a sign, some say, of institutional discipline.

Meanwhile, Ethereum’s growth story is unfolding at a different pace. Network data shows increased activity across both Layer 1 and Layer 2 ecosystems, fueled by stablecoin transfers and decentralized finance usage. Although the price hasn’t yet reflected this surge, analysts believe it’s only a matter of time before fundamentals catch up.

Looking Beyond Crypto

Lee also remains optimistic about traditional equities. He forecasts that the S&P 500, which has already risen roughly 15% this year, could climb another 5–10% by year-end – especially if investors start rotating back into risk assets as inflation cools.

The correlation between stocks and crypto remains high, meaning a broader market recovery could spill over into digital assets as well.

A Fragile but Hopeful Calm

For now, the crypto market sits at a crossroads. Liquidity is thinner, trading volumes remain modest, and investor sentiment is cautious. Yet beneath the surface, key structural indicators – from positioning to technical momentum – are quietly improving.

If history is any guide, these calm periods after a storm often precede major directional shifts. Whether that shift materializes before year-end could determine how the next crypto cycle begins.

The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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