원문 보기
I don't think the Bitcoin high is in place, but you're right. You know, we were too optimistic about this happening by December, but I do think Bitcoin can make an all-time high by the end of January. So I don't think we should we should think the highs are in place for Bitcoin or Ethereum or crypto.
So a lot of it's going to depend on equities recovering, which we expect it to, and that helps the animal spirits and I think a new Fed chair will help. when people got worried about a hawkish Fed, that kind of hurts the discount models, the discount of cash flow models like AI models, but it hurts crypto models, too.
So if we have a dovish Fed, that's really a tailwind. December didn't open the way many bulls hoped. Markets slipped and volatility crept back in. But Tom Lee immediately frames this weakness as short-term noise, not a trend reversal. Two weeks prior, he warned that markets could see near-term turbulence even if year-end would be strong.
And that is exactly what's playing out. The core of his optimism lies in liquidity, specifically the end of quantitative tightening QT, which officially concludes now. The Federal Reserve has been shrinking its balance sheet aggressively since April 2022, pulling liquidity out of the system and creating a major headwind for risk asset, .
This is not a portentous start for December given what you what you were thinking. Although I remember last time you were on, Tom, you said um good year-end action, but rocky in the in the near term. That was about 2 weeks ago and we certainly seen that. But you still bullish on on crypto and stocks going into year-end?
Um I am. I think the biggest tailwind that's going to emerge in the next couple of weeks is around Central Bank. The Fed is set to cut in December, but also today is the day that quantitative tightening ends. And as you know, the Fed's been shrinking its balance sheet since April 2022. It's been a pretty big headwind for market liquidity.
The last time we had an end to QT, quantitative tightening, was September 2019. And if you look back at that period, the markets really responded well. I think within 3 weeks rallied more than 17%. So I do think the timing of QT ending, which is now essentially QE starting, and the Fed and at a time when November kind of was topsy-turvy, so I think people got cautious.
But now after the performance chase, and then you have a a really typically a seasonal tailwind. So I'm pretty bullish into December even with maybe the first day being rocky. Yeah. Um so it's still all about the Fed for you because I was saying that there there is a time when a market can hit an inflection point where the reason the Fed is cutting um becomes a problem for the market.
Cuz I I that's what I thought. Cuz with the jobs and everything else, it there might come a time where surely Fed cuts are the backdrop is that there is some weakness in the market in in the economy. You don't see that. Uh I mean, I'd say that the shutdown put a blackout on data and I think that created a bit of anxiety cuz you know, markets like visibility.
But to me, the fact that claims have been behaving and that the the September jobs report kind of showed a a bit of a recovery. I think the labor market's probably holding fine, but the Fed doesn't want that to worsen. But I think the inflation story is actually weakened a lot. So to me, the the Fed would be cutting for the right reasons, which is as they look at the next 12 months, the tariff inflation impacts are fading, but there's risk on the job market.
So I mean, it's I think it's cutting for the right reason, which is, you know, real rates are tightening if they don't cut. Here here's what concerned me about a couple of weeks ago, Tom, with the market's behavior. And that was watching all of the AI high flyers dip and drop and pretty precipitously in some cases because it looked like the Fed wasn't going to cut.
That raised questions about what was happening in the private markets and it made me start to wonder, okay, are we looking at a lot of business models that don't work if the Fed doesn't continue to cut rates? Are these and are these the business models that are are driving and powering the market right now?
That that that's the one thing that made me sit up and say, huh, that's a little different. Yeah, I I think there was a lot a bit of soul-searching, Becky, in November cuz we know leverage rose and we know there was deleveraging in in some markets like crypto and we know margin that's high. And I think that there was essentially a reset in November because you know, the market had a 6% decline, but the AI stocks and the meme names and a lot of other names
fell even more. So I think that that position reset has been healthy and I think many fund managers we talked to in November in the midst of all that kind of threw in the towel, thought the year rest of the year was sort of a write-off. And and now if December is strong, there's going to be a a bit of performance chasing and I I think that's what you should typically expect in the final weeks of the year.
I thought it was um when we saw Bitcoin sell off and sort of the the high flyers sell off on the notion that Powell got hawkish at that one whatever it was, that one meeting. And then Williams totally turned that around and and the Fed futures jumped and it became clear they're definitely cutting again and we got very little for that.
Uh with the Bitcoin should be back at 100 if it really is totally dependent on uh Fed easy. And if if it's the debasement trade, which people say it is, we didn't get much for now everybody you're sure that they're going to cut now. There was a time where we thought they weren't going to cut. What do we get from going back to cutting mode?
Uh yeah, I mean, Bitcoin and crypto have been disappointing because they really took it in the gut in mid-October. And then kind of got hit again when you're right, when the odds of a Fed cut dropped, um Bitcoin fell and then now that the odds have recovered of a cut, they haven't quite recovered. I mean, I think that that's still the lingering effects of that deleveraging that happened on October 10th.
It's not that different than the wipeout that happened in 2022 with FTX. That took 8 weeks, so we're kind of emerging from that. We're you know, that's 7 weeks in the rearview mirror. So maybe in another week or two, I think crypto has fully washed out and that's when it starts to participate. Yeah, wipeout's a bad word.
Uh if if you could pick another one next time, Tom Lee. Um you had very aggressive targets for the S&P and Bitcoin by the end of the year. I mean, you it'd be crazy to hit the the Bitcoin target, for example. I don't know what that was. But 7,000 on the S&P is still something you think that can happen this year.
Uh yeah, I mean, 7,000's only 2% for S&P from here. I think 5% or maybe even 10% possible in December. So I think a 7,200, 7,300 is likely for S&P. I asked you not to do that. You're giving me a target and a time. Don't don't it's not good for your career. Don't do that. You're going to be wrong one of these time, but you don't care, do you?
You've been right enough. Well, I'm just uh looking at probabilities, but you're right. We've been wrong plenty times, Joe, so I'm I'm okay being wrong, too. Okay. I never have been, really. I don't think so. I that would be a big shocker. No, that it does it happens all of us. How about Bitcoin? What do you think?
You'd be happy with 100 if it got back by the end of December, wouldn't you? Yeah, in fact, you know, I think it was looking good like you said over the weekend and then we got a dump, a decline, sorry. Um maybe because the Bank of Japan looks hawkish. But um I I don't think the 4-year cycle I don't think the Bitcoin high is in place,
but you're right. You know, we were too optimistic about this happening by December, but I do think Bitcoin can make an all-time high by the end of January. So I don't think we should we should think the highs are in place for Bitcoin or Ethereum or crypto. So a lot of it's going to depend on equities recovering, which we expect it to, and that helps the animal spirits and I think a new Fed chair will help.
And we have as Becky said, when people got worried about a hawkish Fed, that kind of hurts the discount models, the discount of cash flow models like AI models, but it hurts crypto models, too. So if we have a dovish Fed, that's really a tailwind. Tom, is there a point though, Joe and I were talking about this in the last block.
Is there a point where [clears throat] a Fed that's too dovish scares the markets because they're worried about inflation? Uh yes. The markets don't want the Fed to lose credibility and you know, in the bond market will kind of protest if the Fed is too dovish, but I think when I look at Fed fund futures, especially implied inflation,
the market the bond market's more dovish than the Fed. So it looks like the Fed is behind and that's why I think cuts are necessary. A more contrarian long-term point arises. Some analysts argue that Bitcoin may be front running a larger macro shift toward a 2026 bear market similar to prior having cycles.
The argument is 2024 is bullish, 2025 euphoric, 2026 corrective. If Bitcoin continues to drift lower into year end, it could mirror 2021's triple red month structure, setting the stage for a counter trend rally early next year. Tom Lee doesn't directly endorse this scenario, but it aligns with his broader view.
Crypto can rally soon, but liquidity must truly expand for a sustained move. So, Bitcoin right now is coming in at around $87,000. Now, a lot of people are perplexed, right? They're like, "Well, quantitative tightening is coming to an end on December 1st. Why are we seeing Bitcoin drop into that?" Well, first of all, you should know that actually the exact same thing happened back last cycle when QT ended.
The other thing that people should remember is that the announcement date that QT ends is not actually necessarily the same date that the balance sheet of the Fed starts going up. Now, that might seem confusing. You might say, "Well, if you look at 2019, you can see the balance sheet of the Fed started to go up in September." Now, you might be led to believe that because the bit balance sheet of the Fed went up in September, you might be led to believe that because of that, you might think, "Oh, well, that means QT ended then." But, in reality, if you dig into the mechanics, the Fed announced the end of quantitative tightening.
They announced it on July 31st, 2019, and said on August 1st, QT comes to an end. So, they announced it on July 30th. So, let's look at what Bitcoin did on July 30th. Right here. You can see Bitcoin dumped into the announcement. It then rallied, but then Bitcoin continued to not really go anywhere, even though the balance sheet eventually started to go up.
Bitcoin continued to bleed, even though the balance sheet was going up. This is what I've tried to communicate to people for years, right? For years. That just because you had the transition from QT to QE doesn't necessarily mean anything. What did mean something was when you had a panic, and then the balance sheet really started to explode, right?
That is where things changed. So, right now, we're not even in the phase where the balance sheet goes up. There's a good chance going into December that the same thing that happened in 2019 is going to happen again. Where essentially, back then in August 2019, it took until, you know, mid-August for that last batch of Treasury maturities to settle.
And maybe the same thing's going to happen again now, right? Like it seems like a likely scenario where it could take a few weeks. You could argue that we might not even notice the balance sheet starting to go up until 2026. But, by then, it might be more obvious to people that we're in a bear market, you know?
Now, that doesn't mean that nothing can put in new all-time highs. Obviously, some cryptocurrencies are putting in new all-time highs, but the hard part with Bitcoin right now is that, you know, it's been dropping throughout the last couple of months, and we know that while it might drop back down and then get a nice rally back up, there is still a decent chance that until the Fed really starts to increase the balance sheet more, and when they really start to drop those interest rates more, it might not have the desired effect, right?
Like it doesn't mean you're not going to have counter trend rallies, but the reality is that what I'm saying, I think, is the most likely scenario right now. Is I'm saying that this 2019 bear market that happened as quantitative tightening ended and QE began, and as interest rates came down, that, I think, is what's happening right now, right?
Like I think that same thing is happening right now, and so you're going to have some rallies by Bitcoin, absolutely. And I've said many times like you will likely have a rally back up to the 200-day moving average. I I think that will happen. But, that doesn't mean it has to happen today, right? Like it could still be a few weeks away.
Who knows exactly when it's going to happen. I could see a scenario where this bleed continues for a little bit longer, and then you have three months in a row potentially that are red. I mean, I hope December is green. And honest, I mean, I don't know. Honestly, I hope December is green. I I mean, it would be nice to have some relief here.
But, there does exist a scenario where you have these monthly returns kind of like 2021, where you had three red months in a row, November, December, and January, and then February and March were green. What if we're front running that, and October, November, December are red in preparation for the 2026 bear market?
But, you could argue that this initial drop already potentially gets you halfway through the bear market. And usually what happens halfway through the bear market is you get a counter trend rally just like Bitcoin got in February and March of 2022. So, maybe that's what happens, right? Like maybe Bitcoin just continues to not go up, and maybe either goes sideways or down for the rest of the year.
A lot of people pricing in the 2026 bear market. And then, potentially in early 2026, you get that counter trend rally, and people like, "Oh, what if 2025 was the bear market year? Like what if what if that's the red year, and 2026 can be green?" Now, unfortunately, I think 2026 will be red, but there might be a brief period where people think it will end up being green.
Tom Lee's analysis paints a complex, but ultimately optimistic picture. The start of December may look shaky, but the deeper forces, ending QT, upcoming rate cuts, seasonal strength, and a positioning reset are powerful tailwinds for both stocks and crypto. Bitcoin is lagging not because the macro case is broken, but because deleveraging takes time.
Meanwhile, the S&P 500 appears poised for potential upside into year end driven by liquidity inflections and performance chasing among fund managers. The key message, stay focused on liquidity, not headlines. Cycles repeat, patterns rhyme. And this transition from QT to QE has historically unlocked major rallies across risk assets.
Comments 0