- Bitcoin has likely bottomed and a recovery rally could accelerate if the stock market hits new records, Fundstrat’s Tom Lee said in a note on Monday.
- Lee expects bitcoin to consolidate off its lows of $30,000 and eventually reach $125,000 before the end of the year.
- “If S&P 500 surges to all time high, expect Crypto to rise to all time high,” Lee said.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Lee reiterated his view that bitcoin will exceed the $125,000 price level before the end of the year, according to the note. Lee’s year-end bitcoin price target represents 241% potential upside from Tuesday morning levels.
Bitcoin topped out at around $65,000 in mid-April before falling to a low of $30,000 over the past month. But Lee thinks the bottom in bitcoin could finally be in following a number of volatile weekend trading sessions. Lee noted that negative headlines on bitcoin failed to spur a sell-off in the cryptocurrency over the long weekend, reinforcing Lee’s view that the bottom in bitcoin is in.
“Despite another set of ‘negative headlines’ bitcoin actually rose $2,000 over the weekend… I can’t help but view this as reinforcing the likelihood bitcoin has bottomed, given bad news is not creating new lows,” Lee explained.
Lee’s bullish view on bitcoin is likely only getting stronger as the S&P 500 and Dow Jones are within striking distance of new record highs. Both indexes were higher in Tuesday morning trades and within 1% of their record levels.
“If [the] S&P 500 surges to all time highs, expect crypto to rise to all time highs,” Lee said.
But a bitcoin bottom and new record highs for the stock market doesn’t mean the cryptocurrency will immediately surge back to its record highs, Lee warned. Instead, sideways consolidation between $35,000 and $60,000 “makes sense,” according to the note.
“We still see bitcoin exceeding $125,000 before year-end 2021. But for now, we are carefully watching bitcoin in the shorter term. A rise above $40,000 would strengthen the case that $30,000 was the low and the low for 2021,” Lee concluded.