The head of research at Fundstrat Global Advisors sees the S&P 500 reaching 7,700 and believes we’re on the cusp of a historic crypto rally.
Fundstrat co-founder and longtime Wall Street strategist Tom Lee has laid out an exceptionally bullish vision for 2026. While forecasting a continued bull run in equities—with the S&P 500 reaching 7,700 points—he also argues that cryptocurrencies, led by Bitcoin and Ethereum, are set to break their historical cycles and surge to new all-time highs. His analysis, detailed in recent CNBC interviews and shareholder communications, points to a convergence of regulatory clarity, institutional adoption, and shifting monetary policy as the catalysts for this significant market move.
Tom Lee’s Market Framework for 2026
Firstly, Tom Lee is not just another optimistic voice; he is a veteran strategist with a 25-year track record in equity research. Currently, he is the Head of Research at Fundstrat Global Advisors and the Chairman of BitMine Immersion Technologies, a major digital asset treasury. Consequently, his 2026 outlook rests on a few core pillars that apply to both traditional and digital asset markets.
Fundamentally, Lee characterizes the current market environment as a “wall of worry.” In other words, despite three consecutive years of strong 20%+ gains for the S&P 500, persistent skepticism and concerns about inflation and geopolitics have created a foundation of fear that historically fuels bull markets rather than kills them. Moreover, he anticipates 2026 will be a “two-speed” year, marked by volatility in the first half before giving way to a stronger, more decisive rally in the second half. This pattern, he suggests, will be driven by the resolution of key uncertainties, most notably the appointment of a new Federal Reserve Chair in May.
S&P 500 Target: 7,700 Points by Year-End
Specifically, for the S&P 500, Lee projects a climb to 7,700 by the end of 2026. This represents a gain of approximately 11.8% from its level in late 2025. His confidence stems from several interconnected factors. Primarily, he sees resilient corporate earnings and continued productivity gains from artificial intelligence as primary engines for growth. Furthermore, he believes the transition to a new Fed Chair will likely result in a more dovish monetary policy stance in the latter half of the year, which would be a tailwind for stocks.
Interestingly, Lee also highlights potential in lagging sectors. While tech remains a favorite, he points to materials, energy, and financials as areas poised for catch-up growth. Most notably, he is a strong advocate for small-cap stocks, arguing that they are positioned to lead the market. He reasons that monetary easing, improving earnings growth, and potential merger activity create a perfect storm of support for this segment of the market.
The Crypto Supercycle Thesis: Breaking the Four-Year Pattern
Transitioning to digital assets, Lee’s predictions become even more striking. He argues that the crypto market may be on the verge of breaking its well-documented four-year cycle, historically tied to Bitcoin’s halving events. According to this traditional pattern, 2026 would be a year of consolidation or decline. However, Lee contends that a unique set of structural tailwinds could override this historical precedent, launching what he describes as a “supercycle”.
Tom Lee’s Bitcoin Price Prediction
Lee’s Bitcoin forecast is ambitious. He has stated that Bitcoin could reach between $200,000 and $250,000 in 2026. To support this, he points to a critical reset in market leverage that occurred after a sharp shock to the system on October 10, 2025, which he likens to a “mini crypto winter” that has now cleansed the market of excess risk.
Additionally, Lee draws intriguing correlations with other asset classes. For instance, he observes that rallies in gold have historically preceded rallies in Bitcoin. He also notes a technical relationship: “For whatever hard-to-explain reason, we found that the copper-to-gold price ratio, when that rises, coincides with Bitcoin rallying,” he said on CNBC. Therefore, the recent strength in precious metals, in his view, is a supportive macro indicator for crypto’s next leg up.
Why Ethereum Is Positioned to Outperform
While bullish on Bitcoin, Lee reserves his most enthusiastic commentary for Ethereum. He has consistently described Ethereum as “undervalued” and entering a multi-year expansion phase. His long-term conviction is rooted in Ethereum’s foundational role in the future of finance, stating, “We believe Ethereum is the future of finance… It’s going to be a payment rail”.
His price predictions for Ethereum are intrinsically linked to Bitcoin’s performance and the ETH/BTC price ratio. Lee outlines a clear framework:
- Base Case: If Bitcoin reaches $250,000 and Ethereum trades at its eight-year average ratio to Bitcoin, Ethereum would hit $12,000.
- Bull Case: If Bitcoin hits $250,000 and the ETH/BTC ratio returns to its 2021 high, Ethereum could reach $22,000.
- Aggressive Supercycle Case: In an extreme scenario where Bitcoin climbs to $1 million, Lee suggests Ethereum could be valued at a staggering $250,000.
Lee’s firm, BitMine, is putting capital behind this thesis. The company has staked nearly $4 billion worth of Ethereum—almost one-third of its total holdings—to become what Lee claims will be “the largest staking provider in the entire crypto ecosystem,” projecting over $1 million in daily revenue from this activity.
Catalysts and Criticisms: What Could Drive or Derail the Rally
Key Market Catalysts for 2026
Several specific developments form the bedrock of Lee’s optimistic outlook for crypto. Firstly, he emphasizes the potential impact of the Clarity Act, which is expected to pass in 2026. This legislation would provide a long-awaited regulatory framework for digital assets in the United States, reducing uncertainty and inviting more institutional capital into the space.
Simultaneously, Wall Street’s embrace of blockchain tokenization is accelerating. Major institutions like JPMorgan and Morgan Stanley are developing Ethereum-based products, including tokenized money market funds and ETF filings. Lee views this trend as critical, arguing it will make blockchain “the settlement layer of Wall Street,” with Ethereum being a primary beneficiary.
Addressing the Skeptics
Unsurprisingly, such bold predictions have attracted criticism. The most prominent skeptic, economist and gold advocate Peter Schiff, has publicly dismissed Lee’s views. Schiff argues that Bitcoin and gold are competitors, not companions, and that a strong gold market actually undermines Bitcoin’s narrative as a superior inflation hedge.
Other critics on social media have pointed to past forecasts from Lee that did not materialize as expected, urging him to “stick to equities”. Lee counters this skepticism by pointing to the sheer scale of moves in traditional markets, like silver’s 25% rally in early 2026: “If these large commodity markets make such a move, how can one be skeptical of digital assets in 2026?”.
Strategic Implications for Investors
So, what does this mean for an investor navigating 2026? Lee’s framework offers several strategic takeaways. Foremost, he advises investors to view near-term volatility—whether in stocks or crypto—not as a warning sign but as a potential buying opportunity within a larger bullish trend. He anticipates a choppy first half followed by a stronger second half, suggesting a strategy of gradual accumulation during dips.
Secondly, his emphasis on sector and asset class rotation is crucial. Within equities, his call on small caps and lagging sectors like financials and energy suggests a broadening of the market rally beyond mega-cap tech. Within crypto, his focus on the ETH/BTC ratio is a key metric to watch, as it will signal whether Ethereum is indeed beginning its anticipated outperformance phase.
Finally, the importance of policy watch cannot be overstated. The progression of the Clarity Act through Congress and the selection of the next Federal Reserve Chair will be two of the most significant market events of the year, with the power to alter the trajectory Lee has outlined.
Final Analysis
Tom Lee’s 2026 outlook paints a picture of a financial landscape on the brink of major breakouts. His dual forecast—a rising S&P 500 led by AI productivity and small caps, alongside a historic crypto rally fueled by regulatory clarity and institutional adoption—rests on a interconnected view of macro policy, market structure, and technological adoption.
While critics rightly point to the inherent risks and volatility, Lee’s analysis provides a coherent, data-informed narrative for why this year could be different. The core of his argument is that we are witnessing a fundamental shift in how traditional finance interacts with digital assets, and that this convergence, combined with supportive monetary policy, could overpower the historical patterns that have governed markets for years. As with all forecasts, only time will bear out their accuracy, but they undoubtedly provide a compelling framework for understanding the potential currents that will shape the financial world in 2026.
Sources:
- Phemex. “Tom Lee Forecasts Bitcoin All-Time High in 2026, Ethereum to Outperform.” https://phemex.com/news/article/tom-lee-forecasts-bitcoin-alltime-high-in-2026-ethereum-to-outperform-54266
- Yahoo Finance. “Fundstrat’s Tom Lee Says 2026 Will Bring ‘Joy, Depression, And Rally,’ Backing Small Caps As Winners.” https://finance.yahoo.com/news/fundstrats-tom-lee-says-2026-023029678.html
- CNBC. “Tom Lee sees S&P 500 hitting 7700 in 2026, extending bull market.” https://www.cnbc.com/2025/12/11/tom-lee-sees-sp-500-hitting-7700-in-2026-extending-bull-market.html
- DL News. “Bitmine stakes $4bn Ethereum. Why Tom Lee forecasts price jump in 2026.” https://www.dlnews.com/articles/markets/bitmine-stakes-usd-4bn-ethereum-tom-lee-forecasts-price-jump/
- FS Insight. “Tom Lee’s 2026 Market Outlook.” https://fsinsight.com/event/tom-lees-2026-market-outlook/
- CCN.com. “Bitcoin and Ethereum to $250,000? Here’s Why Tom Lee Just Gave His Most Bullish Predictions Yet.” https://www.ccn.com/news/crypto/bitcoin-ethereum-250000-tom-lee-most-bullish-predictions-yet/
- InvestingLive. “Fundstrat’s Tom Lee says Bitcoin new highs soon. Sees S&P 500 to 7,700 by end 2026 too.” https://investinglive.com/Cryptocurrency/fundstrats-tom-lee-says-bitcoin-new-highs-soon-sees-sp-500-to-7700-by-end-2026-too-20260105/
- Fundstrat. “Webinars and Financial Outlooks.” https://fundstrat.com/media/webinars-and-financial-outlooks/
