Fundstrat’s CIO Tom Lee believes that the market could see a ‘surprise upside’ despite the growing Fed rate hike fears. In a recent interview with CNBC, Lee noted,
September is always a weak month. Because of mounting concerns, the market might surprise us to the upside. The September 15th Fed meeting is the pivot point.
He added that if the Fed does not cut or hike (hold interest rate pause at current 3.50%-3.75%), the markets could rally “very strongly.”
In particular, he billed crypto as the best candidate to wildly explode if the bullish outlook holds.
We think the asset with the most FOMO in Sept and into year-end will be crypto, particularly $ETH.
The macro, especially Fed rate hike fears, punctured the late August crypto market rally after Chair Kevin Warsh echoed a hawkish stance last week. For him, inflation remained sticky, and the underlying market conditions were not favoring a loose monetary policy.
The hawkish tone stalled Bitcoin’s rally and kept its price struggling below $80K over the weekend and into September. Still, two macro updates could confirm or invalidate Lee’s outlook.
Will macro data back Lee’s bullish crypto outlook?
Before the Fed rate decision on the 15th of September, there are two scheduled labor reports.
On the 1st of September, the JOLTS Jobs Openings report will be out. Then on the 4th of September, Non-Farm Payrolls (NFP) will also be released, and traders will use it to gauge the next Fed rate move.
In most cases, strong labor markets will force the Fed to pause the interest rate. On the contrary, a weak labor market would reinforce the need for a rate hike.
Right before the Fed rate decision, key inflation data (U.S. CPI, Consumer Price Index) will also be released on September 11th. Unless data points to a strong labor market and easing inflation, the chance of a rate hike is likely.
And that’s what interested traders are betting on, as of the time of writing. There was a 69% chance of a rate hike.
This directly dents risk sentiment and the rising market caution despite the recent rally. It remains to be seen whether the upcoming macro data will ‘surprise’ and favor crypto bulls as Lee projects.
Separately, Glassnode also flagged cautious optimism and noted,
BTC holds near $78,300 after rallying from $64k lows. Institutional inflows stay strong, but rising leverage, tight volatility spreads, and softening retail activity point to a cautious, transitional market.
Still, the 50-week MA (currently at $81K) remains the last stand for BTC bears; decisively reclaiming it would make the next leg of the uptrend possible.
Final Summary
- Lee expects the Fed rate decision to be pivotal for the crypto market, with potential ‘upside surprise’
- BTC’s rising leverage could risk the momentum, according to Glassnode