Bitcoin Flashes Rare Buy Signal—S&P 500 Primed for Short-Term Explosion

Crypto’s canary in the coal mine just chirped. When Bitcoin’s price action starts telegraphing moves in traditional markets, Wall Street’s quant algos scramble to adjust.

The correlation playbook is back: BTC’s breakout above key resistance levels historically precedes risk-on rallies in equities. This time? The setup looks even more pronounced.

Never mind that half the banks still can’t agree whether crypto is an asset class or a nuisance. When the market speaks, even the most stubborn suits listen—usually three days too late.

Tom Lee says tariff fears are fading fast

Tom said that although tariff fears could resurface, the macro picture looks better now than it did in early April. He said April 7 was the peak for tariff panic and conditions since then have improved. Tom also pointed to signs from other assets that lead stocks.

Credit markets, high-yield bonds, and the VIX are all signaling reduced stress. “High yield has recovered almost all the widening that happened since April 7,” he added.

Tom explained that the VIX term structure is now inverted, which tells him volatility is calming down. He said that sets the stage for stocks to move higher.

Looking ahead, he said 2026 offers potential confidence, especially if there’s deregulation and better comparisons for corporate earnings. If new tariff rules open the door to more exports, then earnings could get another boost.

Tom wasn’t pretending the rally to new highs will be easy though. “The bar for recovering to all-time highs is of course higher,” he said, but made it clear that the current setup is favorable. “The risk reward is actually still positive here,” he added. He said the market can still go higher, even with all the noise.

Tom Lee points to crypto and commodities for direction

Tom said companies have proved they can handle shocks. He pointed to Covid, inflation, and even the Fed’s aggressive rate hikes. “Companies survived a bullwhip effect on the economy. They survived a surge in inflation. They survived the Fed hiking at the fastest rate ever,” he said. He expects earnings to beat forecasts again, especially if conditions stabilize.

Tom listed off names that had been dragging the market down—Tesla, the Magnificent Seven, and Bitcoin—but said they’re all rebounding now. “They’ve begun to recover,” he said, before stressing again that Bitcoin is already ahead of its April 2 price and that’s the biggest clue that stocks should follow.

Fundstrat’s Tom also slammed the Fed for sitting on their hands while the European Central Bank is already cutting rates. He pointed out that the ECB’s inflation measure leaves out shelter costs. If the Fed did the same, Tom said, “Core inflation here would be lower than Europe’s.” Still, US interest rates are 125 basis points tighter than the ECB, which he said makes no sense.

He said it’s easy to see the argument for the Fed to start cutting now, even before the full effects of tariffs show up. But he also questioned if Trump’s pressure might have boxed Chair Jerome Powell in. If inflation drops but growth slows, Powell might get blamed. “It sets him up to possibly be the fall guy,” Tom said.

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