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• According to Lee, the September 15 Fed meeting could be a “pivot point” for markets. 
• His base case is that the Fed does not hike rates, which could result in a stock market rally mid-month.
• On crypto, he said he expects institutional allocation to strengthen in the fourth quarter.

Tom Lee, Fundstrat co-founder and chairman of Bitmine Immersion Technologies (BMNR), said on Monday that the S&P 500 could surprise to the upside in September if the Federal Reserve leaves interest rates unchanged, while Bitcoin’s (BTC) recent rally could be the beginning of a much larger move.

In an interview with CNBC, Lee stated he had previously expected a roughly 10% market correction in September. According to him, there’s now a possibility that mounting concerns about the Fed, AI spending and seasonal weakness could instead fuel a rally.

“I'm actually now thinking because of all this mounting concern, the market might surprise us to the upside,” Lee said. “And I think maybe September 15th, the Fed meeting is the pivot point. If the Fed doesn't hike, which is our base case, I think actually the markets could rally very strongly.”

The S&P is on track to post gains of around 3% in August, a recovery after two consecutive months in the red. In morning trade on Monday, the SPDR S&P 500 ETF Trust (SPY) edged 0.25% lower after an uptick in oil prices following renewed tensions in the Middle East. 

The SPDR Dow Jones Industrial Average ETF (DIA) dropped around 0.5% in morning trade, while the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) traded flat. 

The Nasdaq-100 is on track to outpace both the S&P 500 and the Dow Jones Index in August; however, Bitcoin has far outperformed all three. 

Lee Sees S&P 500 Above 8,000 Before Correction

Lee said the S&P 500’s correction could be delayed until October. Before that, he thinks the index could rise above 8,000, then fall to around 7,374.

Even with that correction, Lee remains bullish on stocks through year-end. He said his 8,200 S&P 500 target may be too low, pointing to stronger earnings expectations.

“You know, the 8,200 I think is still a low number. What the S&P could achieve by the end of the year, given how much earnings have revised higher,” Lee said. He said expectations for 2027 earnings have risen from $350 to $415, and could reach $425.

Bitcoin’s ‘First Leg Up’

Lee was even more bullish on crypto, stating that several catalysts could drive institutional buying through the remainder of the year.

“I think this is the beginning,” Lee said. “I think it's the first leg up because this was like a catching people offside, moving crypto.”

“If Clarity Act passes, which could happen this year, and if it does, I think, you know, Bitcoin and Ethereum have a huge fourth quarter,” he said, adding that he has not abandoned his $150,000 Bitcoin target. “I think 150 is still possible, not that far off.”

Bitcoin’s price fell around 1% in the last 24 hours, slipping below $78,000 in morning trade. On Stocktwits, retail sentiment around the apex cryptocurrency trended in ‘bullish’ territory over the past day, accompanied by chatter at ‘high’ levels.

Read also: The Smallest Bitcoin Treasury Stock Saw A Bigger August Than Strategy — While GME Sits Out

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