All the pieces are in place for crypto to be bottoming right now, says Fundstrat's Tom Lee
Speakers
Tom Lee
— Managing Partner & Head of Research, Fundstrat
Summary
Tom Lee of Fundstrat joined Squawk Box to discuss market volatility, Washington policy uncertainty, Fed leadership, and crypto. He said all pieces are in place for crypto to be bottoming now, citing a technical time-and-price alignment and healthy fundamentals, while also stressing the historical importance of a strong January for the S&P 500. He described gold/silver strength as having siphoned risk appetite from crypto and flagged AI valuations as a potential mean-reversion risk.
- Tom Lee said market turmoil is partly driven by Washington picking winners and losers ahead of midterms.
- He said a GOP House hold would be a positive surprise, though consensus expects GOP to lose the House.
- He warned the new Fed chair confirmation and first FOMC meeting could make midyear markets bumpy.
- He highlighted the January indicator: strong first-five-day and January returns historically favor full-year S&P 500 gains.
- He said crypto may be bottoming now, citing time-and-price alignment at bitcoin 77,000 and ethereum 2,400.
- He said crypto fundamentals are good, with Ethereum active addresses going parabolic and little industry leverage.
- He viewed gold and silver taking a breather as healthy for risk appetite.
- He agreed AI stock valuations could mean revert but did not give a specific trade.
Ideas
January indicator favors S&P gains.
The January indicator is historically telling: when stocks are up in the first five days and January is up, the S&P 500 has been higher 33 to 36 of 36 instances and averaged an 18% gain; the non-instances averaged down 5%, so a strong start matters for full-year returns.
Crypto is bottoming now.
Fundstrat's crypto advisor has been calling for bitcoin to 77,000 and ethereum to 2,400 since mid-November; Tom Lee says time and price aligned over the weekend, so crypto may be bottoming now. Crypto fundamentals are good, Ethereum active addresses are going parabolic, and the industry lacks leverage after October, making the setup constructive.
