Tom Lee went on television September 15 and predicted one of the biggest stock market rallies of our lifetime for the final stretch of 2026.
Less than 24 hours after Lee made his call, the Federal Reserve raised interest rates and left the door open to another hike, complicating his bullish outlook.
Lee told CNBC that the fourth quarter “could be one of the biggest rallies, and I think it continues next year to one of the biggest rallies of our lifetime,” citing expectations that markets had not yet reached peak earnings.
He has also placed a specific number behind his conviction, targeting an S&P 500 level of 8,200 by year-end, with technology stocks and the Magnificent Seven expected to lead the charge.
His argument hinges on the belief that a large pool of cash sitting in money-market funds could rotate back into riskier assets once investors gain clarity on the Federal Reserve’s rate path.
Not everyone on Wall Street shares that optimism, with Ed Yardeni cutting his own year-end S&P 500 target to 7,900 from 8,400 just one day after Lee’s television appearance.
Yardeni pushed his prior 8,400 target out to mid-2027, raised the odds he assigns to a bearish scenario from 20% to 30%, and wrote that “the risks of a downturn have increased over the next three to six months.”
He pointed to higher energy prices and stubborn Treasury yields as key concerns, with the 10-year Treasury yield reaching 5.00% on September 15, its highest level of the past year and 6.8% above where it stood just one month earlier.
Even if Lee’s stock-market forecast proves correct, crypto investors cannot assume a rising S&P 500 will automatically lift digital asset prices, as Bitcoin’s three-month correlation with the Nasdaq 100 has fallen sharply while its relationship with gold has climbed to its highest level in years.
Bitcoin (CRYPTO: BTC) currently trades at $76,600, down 34% from $116,484 a year ago, meaning it would require roughly a 53% gain just to return to that prior level.
Ethereum (CRYPTO: ETH) trades at $2,470 and would need a 100% gain to recover its previous highs, representing a substantially more demanding climb than any equity index rally alone could justify.
XRP (CRYPTO: XRP) faces an even steeper road, trading at $1.30 against a prior level of $3.09, meaning a recovery above $3 would demand more than a 130% appreciation from current prices.
Strategy (NASDAQ: MSTR), the largest corporate Bitcoin treasury, also illustrates how quickly crypto drawdowns can damage corporate balance sheets, reporting 846,000 BTC held alongside an $8.32 billion unrealized loss in its Q2 results filed in a July 30, 2026 8-K.
The scenario that would matter most for Bitcoin and XRP would involve October 2026 proving to be the Fed’s final rate hike, followed by a meaningful retreat in Treasury yields from the current 5% level.
Without that combination of conditions falling into place, reaching new all-time records in crypto before December 31 remains a far more demanding challenge than Lee’s broader equity market call implies.
