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Lithium prices can be volatile, but we may be about to see another “violent upside” as a market supply glut diminishes, according to analyst Geraldo Del Real.
The co-founder of Digest Publishing and editor of The Daily Profit Cycle, recently said on the Investing News Network podcast, that we are in the early stages of a multiyear “bull cycle 3.0” for the metal.
China’s Extended Supply Glut Has Eased
Lithium prices collapsed by 86% from their 2022 highs due to oversupply, but balance is returning to the market through a mix of Chinese government intervention, rising EV sales, and mothballed mining operations, Reuters reported, citing analysts and traders.
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Del Real said he hadn’t expected the Chinese supply glut to remain for as long as it did, but the market is showing signs that could boost the bullish outlook.
Ganfeng Lithium, the world’s largest producer of the metal, reportedly said in a Q1 2026 earrnings release that surging demand for electric vehicles and energy storage system batteries has created “a hefty gain in both production and sales.”
Electric vehicles have been the cornerstone of lithium demand in recent years, but geopolitical events and demand from new sectors could start to have a major effect on the market.
Iran War Supply Chain Damage Could Be a Factor
Del Real said that the continuing U.S.-Israeli conflict with Iran had highlighted the “urgency to have independent, critical metals supply chains, including lithium, outside of China.”
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U.S. President Donald Trump’s broad tariffs in April 2025 increased trade hostilities with China, as both countries increased export restrictions on key components used in technology and military equipment.
Meanwhile, a study released last June by Sweden’s Lund University said that the world’s largest economies would fall short of lithium EV demand needs in the coming years.
“While domestic lithium production in China, Europe, and the USA—especially in Europe, where production may grow 10-fold between 2025 and 2030—will increase, it will not fully meet demand,” the study said.
Del Real said that we could see new incentives from both the U.S. and Chinese governments to boost EV adoption, which could further speed up demand.
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‘Tech Bro’ Space Race And AI Adds to Minerals Demand
Del Real said he refers to the U.S. Big Tech billionaires, such as Tesla (NYSE:TSLA) CEO Elon Musk and Amazon (NYSE:AMZN) Executive Chair Jeff Bezos, as the “tech bros,” and their desire to ramp up spending on space exploration is another bullish factor for lithium prices.
Consulting firm McKinsey in 2024 projected a $1.8 trillion economic opportunity coming from space exploration by 2035. Its figures include “backbone” applications such as satellites, rockets, and services like GPS.
Growing space expenditure, alongside the surge in artificial intelligence infrastructure, will require “massive amounts of minerals, including lithium,” Del Real said.
He added that a recent report had shown that “around half” of the planned AI data centers had been shelved due to a shortage of minerals.
“This takes it from substantial to extreme,” he said, referring to lithium’s future demand.
What’s Next
As analysts point to the potential for a new lithium bull cycle driven by tightening supply and rising demand from electric vehicles, AI infrastructure, and energy storage, the sector is also expected to remain highly volatile as these trends play out.
For investors looking to take a more tactical approach to short-term market movements, products from Direxion are designed to provide daily leveraged exposure to specific sectors and themes, allowing active traders to express directional views with greater sensitivity to price swings.
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