Wall Street Bull Tom Lee: U.S. stocks will rise another 10% next year, Bitcoin has not yet peaked

Fundstrat Global Advisors Co-Founder Tom Lee stated that the bull market still exists, and it is expected that by the end of 2026, the US stock market’s S&P 500 index will reach 7,700 points, an increase of about 10% from the current level. He believes that Bitcoin in 2026 will break a four-year cycle, with the ISM manufacturing index remaining below 50 for three consecutive years and the copper-to-gold ratio not yet peaking, indicating that Bitcoin has not yet reached the cycle top.

S&P 7700 Point Forecast: The Astonishing Pattern of Historical Data

(Source: Fundstrat)

Tom Lee predicts that by the end of 2026, the S&P 500 will reach 7,700 points, representing roughly a 10% rise from the current level of about 7,000 points. The most optimistic forecast remains Oppenheimer’s expectation of 8,100 points. Tom Lee initially forecasted the S&P 500 would close 2025 at 6,600 points, later revised upward to 7,000 points, and current actual performance aligns closely with his prediction.

Tom Lee’s confidence is based on solid historical data. He points out that since 1928, after three consecutive years of gains exceeding 20%, the fourth year sees the S&P 500 average a 12% increase, which he describes as “quite good.” This statistic challenges common market myths: many investors believe that after three years of big gains, the fourth year will inevitably see a correction. However, history shows that strong upward trends often have inertia, and market momentum can persist longer than most expect.

He believes that the trajectory in 2026 may be similar to 2025, experiencing a period of volatility followed by a rally toward the end of the year. Historically, periods of three consecutive years of gains over 20% often develop this way. This “oscillate first, then rise” pattern offers an operational framework for investors: pullbacks at the start of the year are buying opportunities rather than reasons for panic.

At the highest point of this “wall of worry” is investors’ concern—whether US stocks can continue rising after three years of gains over 20%. Tom Lee lists investor worries: overvalued AI, transition period needed for a new Federal Reserve chair, social unrest concerns, and the possibility of the Supreme Court overturning US tariffs. However, he states that the market has not yet priced in the more moderate Fed expectations for next year, which could be another positive factor for US stocks.

Bitcoin Breaking a Four-Year Cycle: Three Major Evidences

Tom Lee’s view on Bitcoin is more aggressive, believing that 2026 will break the traditional four-year cycle that Bitcoin has followed, which usually ends in a down year. Bitcoin’s cycles are traditionally synchronized with halving events, reaching a peak 12 to 18 months after halving, followed by a two-year bear market. However, Tom Lee believes that this year, cryptocurrencies are experiencing numerous positive factors, rendering this traditional pattern invalid.

Three Major Evidences That Bitcoin’s Cycle Will Disintegrate

ISM Manufacturing Index Remains Low: The index has been below 50 for three consecutive years and is far from a new high. Bitcoin price tops are closely related to peaks in the ISM manufacturing index, and the current low level suggests Bitcoin has not yet hit a cycle top.

Copper-Gold Ratio Shows No Signs of Peaking: Bitcoin’s tops are often highly correlated with peaks in the copper-to-gold ratio, but there are no signs that this is imminent. This indicates Bitcoin remains in the mid-stage of a bull market rather than nearing a top.

Institutional Capital is Changing Supply-Demand Dynamics: Bitcoin spot ETFs have absorbed hundreds of billions of dollars from institutional investors, who rarely unwind positions quickly, thereby locking in supply and suppressing volatility.

Tom Lee points out that Bitcoin’s peak is closely related to the high in the ISM manufacturing index. The ISM manufacturing index is a key indicator of US manufacturing activity, with readings above 50 indicating expansion and below 50 indicating contraction. The index has been below 50 for three years, showing manufacturing remains weak. Historically, Bitcoin’s cycle peaks tend to synchronize with peaks in the ISM index; the current low suggests Bitcoin has not yet reached the cycle top.

The copper-to-gold ratio is another important macro indicator. Copper, known as “Dr. Copper,” accurately reflects economic activity strength, while gold is a safe-haven asset that rises in times of economic uncertainty. The copper-gold ratio (copper price divided by gold price) reflects market preference between economic growth and safe-haven demand. Tom Lee notes that Bitcoin’s top usually correlates with peaks in the copper-gold ratio, but there are no signs this is happening now. This suggests Bitcoin is still in the bull phase rather than near the top.

The inflow of institutional capital is the most direct factor changing Bitcoin’s cycle. Bitcoin spot ETFs provide compliant investment channels for pension funds, insurance companies, and other long-term capital—holders with investment horizons measured in years rather than months. When large supplies are locked in long-term, market liquidity decreases, and volatility diminishes. Tom Lee believes this structural change will cause Bitcoin to move away from the traditional four-year boom-and-bust cycle and into a more stable, long-term upward trend.

Investment Strategies for 2026: Full Bet on AI and Blockchain

According to Tom Lee, the main drivers of profitability and growth will be AI and energy infrastructure, as well as Wall Street’s transition to blockchain— including tokenization of stocks, credit, and real estate, along with the reshoring of manufacturing to the US. The sectors he is most optimistic about for 2026 include technology (especially AI, Bitcoin, and Ethereum), as well as previously suppressed raw materials, energy, and financial industries.

Fundstrat has upgraded its ratings for raw materials and energy from neutral to overweight, while downgrading consumer discretionary from overweight to neutral. The firm favors stocks like Eaton, GE Vernova, Bloom Energy, Albemarle, MP Materials, and AngloGold—companies benefiting from energy transition and manufacturing reshoring trends, such as Eaton providing power management solutions, GE Vernova focusing on clean energy, and Bloom Energy developing fuel cell technology.

Tom Lee believes that additional Fed rate cuts could boost underperforming financial stocks, including American Express, M&T Bank, Robinhood, and Ally Financial. Financial stocks have underperformed compared to tech from 2023 to 2025, mainly due to high interest rates and regulatory pressures. If the Fed continues cutting rates in 2026, it will lower banks’ funding costs and boost credit demand, providing a direct positive outlook for financials.

Notably, Tom Lee is also chairman of Ethereum vault company BitMine Immersion Technologies, and his bullish stance on Bitcoin and Ethereum may entail conflicts of interest. However, his track record of forecasts lends credibility to his views.