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was the Bitcoin crash first that led I don't know if I buy that but can you help walk us through what might be going on there if that's even a real situation in the past 12 months uh not only did we have a strong rally in equities we had a strong rally in cryptocurrencies and that did bring in quite a number of uh investors right and then institutions entering the market through futures and some actually buying coins outright so I wouldn't be surprised if those investors who saw risk on assets everywhere outperforming globally uh were also buying cryptocurrencies and so I think as as Bitcoin began to weaken and and they derisked when you look at uh the ownership of Bitcoin it's maybe 70% outside the US it's really a globally held asset class so in the next 5 months uh a real recovery in price Tom Lee envisions Bitcoin's future as transformative predicting its value could reach $5 million if it achieves market cap parody with gold.
Highlighting Bitcoin's role as a potential backbone for a new financial system, Lee emphasizes the importance of strategic Bitcoin reserves, suggesting that US ownership of significant amounts could grant economic stability and influence in a decentralized future. As Bitcoin adoption grows, institutions are expected to embrace it as a secure, immutable, and widely trusted asset.
Lee also foresees an unprecedented surge in Bitcoin prices driven by increasing adoption, institutional interest, and the launch of Bitcoin ETF. He predicts over 1 billion active crypto wallets by 2025, marking a rapid accumulation of wealth in the crypto ecosystem. This growth, coupled with Bitcoin's integration into financial systems and its utility in securing information, positions it as a game-changing asset.
In discussing the broader implications, Lee criticizes conventional economic metrics, asserting their manipulation and highlighting Bitcoin as a transparent alternative. With corporations and governments increasingly recognizing Bitcoin's value, Lee underscores its potential to reshape traditional financial systems and urges investors to embrace its opportunities for a prosperous future.
uh time frames have changed maybe because like maybe the world's more short-term focused but you know with instant liquidity I think that's why people can go from bull to bear because they can act with a push button now would you be likely to advise them to seek opportunities on the way down or to sort of wait for a clear definable hammer sort of bottom well if if someone was really good tactically timing then nobody wants to buy on the way down But I I've never been able to say on this precise date, you'll have enough liquidity to buy at the low cuz what what usually happens is the low's established, the market's rallying, but it's already retraced 50% of the decline.
You don't know it's the low until a week later. Well, the longer it goes, the lower it goes without them pulling the trigger, the more likely they're going to not pull the trigger because if we go lower, it gets scarier. Yeah. It gets to become a buyer strike, right? I assume you don't see a bare market coming like a full-fledged 20enter.
I like it's possible because it's been a couple years, but this would have to be because there has to be a layered shock on top of this. Like if if the Fed, like for instance, if somehow the Fed decides that the economy is weakening, but they choose to fight inflation and let a recession happen. So in other words, the idea is well, we've been wanting a recession to kill inflation.
Like, let's just let it happen. Yeah, then of course we're going to have a big draw down. But that would really require a Fed that decided the employment mandate wasn't important because you know a recession we just like once a recession starts there's no such thing as like we can engineer a mild recession.
I mean it's like you could have a severe recession because you just don't know. You can see why people want to maybe start to be nervous and price it in. This is the sixth day in a row. This from Dietrich. It's the sixth day in a row on Thursday that the market is going to be up or down 1%. Sixth day in a row.
It hasn't happened since November 2020. And you're starting to see some signs of early panic. Uh chart. Next chart, please. Daniel, this is from JP Morgan via Jessica Menton. In the first hour of trading, now this was on Mar this was yesterday. In the first hour of trading, the so-called retail investors yanked $1.2 billion out of the US equity market.
the largest pullback during that time period since JP Morgan's data began a decade ago. That's meaningful. So, in other words, yesterday at the open, people said, "Get me the out." Additionally, this is from Ned Davis. Uh their trading, their daily trading sentiment composite is down to 20, which I don't know what's in here exactly, but that's extreme pessimism.
So, it's this weird sort of dynamic where we're not that off the highs, but the news is so newsy and noisy that people are freaked out. So, we're there's fear. I don't know if it's a bottom fear, but trade, but it's and I'm sure the depth of market like this market is super thin. It now if someone sells, you're going to just see comets falling out of the sky.
This is from All-Star Charts. I think this is Grant's work. Year one of a bull market, obviously, up and to the right. Year two of a bull market by definition up and to the right. Year three tends to be pretty disgusting, which is where we are now. Yeah. Uh yeah, this is um I've seen this chart and uh the I'm I'm I'd say I don't necessarily have problems with how this is constructed.
That being said, no, I thought you were about to falg of many bull markets. But the one thing I'd say is that there's wide distributions in year three. So there's actually plenty of 20% years. Okay. So it's not like cuz this chart makes it look like you're only going to be 5% and like you hover like it doesn't show all all of the distributions.
Yeah. So this is a because uh is a wide as wide the distributions are year three also reflects bull markets end and then you you have a huge decline. Tom Lee predicts Bitcoin could reach $5 million if its market cap matches gold, citing its security and decentralized nature as key to transforming the financial system.
He advocates for nations to hold Bitcoin reserves, viewing it as a strategic asset for future economic stability. By 2025, Lee expects over a billion crypto wallets and significant institutional adoption driven by Bitcoin ETF. He sees Bitcoin becoming a critical asset in finance and digital security, marking a new era of wealth and global market disruption.
And you have a chart much better than this all-star charts chart. You have a chart showing that uh the second half after a backto-back 20% year tends to be pretty lousy. Yes. What are we looking at here? This is uh all years that had two consecutive 20% years preceding it. That's like that first vertical line says year zero.
And then we're just saying what does that 12 months later look like? And as you can see, you might be okay in the first half, but the second half's usually tougher. Sorry, is that 1880? I saw that, too. Yeah. Is that like Yellowstone? Tom was digging deep. Okay. So So this is not So this is not wildly out of character for what typically happens after you've had a big run in stocks.
Yes. The reason why I believe in this stuff is cuz it's just human behavior. Like the variables in all these years are different. Tax rates are different. Inflation regimes are different. Republican president, Democrat president, like the all of that stuff is interchangeable. But the the mood the component of this that's not is how people trade.
Yeah. Because it's eventually it's fear and greed. We know good news gets priced in and it's hard to turn. But then, you know, after a certain amount of time people might get complacent or whatever you'd call it. Tom, you were you were bullish earlier. I don't know if you still are about small caps and I think one of the reasons why we have your chart is that the S&P uh is driven by largely by tech stocks but the Russell 2000 has much more exposure to rate sensitive industries.
So is the thinking that if we if the economy weakens and rates go down that the Russell would maybe go down less than the market or do you think that it would outperform in a bull market? What what's your thinking here? I don't think if there's a recession small caps outperform. So like on that downside I don't think it's protected.
But if we look at the composition here I actually am surprised it's done so poorly because for instance uh healthc care is the you know the best performing sector year to date and you can see healthc care is a bigger weight in small caps. Financials have done well year to date. It's a bigger weight in small caps.
Industrials have outperformed year to date and it's a bigger weight. you have less exposure to tech and so what's weighing the small caps down this year? I think it's the push button because just people saying sell small caps higher. Yeah. So they're derating. They got cheaper. Okay. A lot of small caps are down 15% in a 50% draw down.
I didn't realize that. Yeah. So that it's not like someone's doing relative value. They're selling the ETF. They're selling IWM. It's like the first thing people sell. Yeah. It's like, "Oh, you worried about the economy? Get that out of here. We're not going to need that. Tom Lee presents a compelling case for Bitcoin's transformative potential, predicting its value could soar to $5 million if it achieves market cap parody with gold.
He emphasizes the importance of strategic Bitcoin reserves, suggesting that US ownership of substantial amounts could ensure economic stability and influence in a decentralized financial system. Lee highlights Bitcoin's role as a secure, immutable, and widely trusted asset that could serve as the backbone of a new global financial framework with increasing adoption, institutional interest, and innovations like Bitcoin ETFs.
He predicts a surge in demand that could drive unprecedented growth with over a billion active crypto wallets expected by 2025. Lee also.
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