Tom Lee, Chairman of Bitmine Immersion Technologies, has projected that the S&P 500 could experience an additional 4% to 10% increase by the end of 2025, potentially surpassing the 7,000 mark. He anticipates a corresponding rally in the cryptocurrency markets. Lee shared these insights during a recent interview on CNBC's Closing Bell program.
Market Outlook and Federal Reserve Influence
Lee, who also holds the position of Head of Research at Fundstrat Global Advisors, maintained a bullish outlook despite recent market volatility. Fundstrat's initial year-end target for the S&P 500 was set at 6,600 during the market lows in April. With the index currently trading around 6,800, Lee believes there is still potential for continued growth in the remaining weeks of the year.
The analyst attributed his optimistic forecast to the Federal Reserve's decision to implement interest rate cuts, which commenced in September after a prolonged period of pause. He highlighted that this pattern has occurred only twice in the past 50 years, specifically in 1998 and 2024. In both instances, persistent investor skepticism may have contributed to late-year market advancements.
Crypto Market Resilience
On October 10th, the crypto markets experienced what Lee described as the most significant liquidation event in five years, partly influenced by escalating tensions surrounding U.S.-China tariffs. Despite this pressure, Bitcoin saw a relatively modest decline of only 3% to 4%. Lee interpreted this as a demonstration of resilience and the asset's store-of-value characteristics.
Both Bitcoin and Ethereum are currently at record lows in terms of open interest, which measures outstanding futures and options positions. Concurrently, technical indicators are beginning to show positive trends. Lee suggested that a cleaner derivatives backdrop often precedes upward price movements. Furthermore, developments in traditional finance, such as JPMorgan's willingness to accept cryptocurrencies as collateral, are providing additional support for the market.
Crypto as a Market Indicator
Lee posited that cryptocurrencies often serve as an indicator for stock market direction and broader liquidity conditions. He drew a parallel between Bitcoin's performance and that of the S&P 500, and connected Ethereum's movements to those of small-cap stocks via the Russell 2000 Index.
Ethereum Network Activity and Future Expectations
According to Lee, Ethereum's activity on both layer-1 and layer-2 networks is increasing, largely driven by the usage of stablecoins. However, he noted that the impact of this growing usage on prices typically takes time to materialize. This observation supports his expectation of significant upward price movements for both Ethereum and Bitcoin towards the end of the year.
Current Market Performance
U.S. stocks concluded Friday trading higher. The S&P 500 closed at 6,791.69, marking a 0.79% increase for the day and a 15.73% gain year-to-date. At the time of reporting, Bitcoin was trading at $115,776, up 3.4% over the preceding 24 hours and 20% year-to-date. Ethereum was changing hands at $4,230, down 7% over the last 24 hours but up 18.15% year-to-date.