On a recent CNBC ‘Squawk Box’ segment, Thomas Lee, Co-Founder, Managing Partner, and the Head of Research at Fundstrat Global Advisors, delved into various economic and financial topics, offering insights on everything from inflationary trends to the potential trajectory of cryptocurrencies.
Inflation and Market Dynamics: Lee initiated the discussion by addressing the prevailing market conditions. He pointed out that August has historically been a challenging month for markets, particularly when they’ve exhibited strong performance through July. He attributed the recent market weaknesses to factors such as rising yields, a strengthening dollar, and concerns about China’s economic landscape. However, Lee remains optimistic about a potential market rebound later in the month, especially considering upcoming events like the FOMC minutes release, the Jackson Hole meeting, and the unveiling of the PCE inflation data.
On the topic of inflation, Lee foresees a decline. He noted that while the recent core inflation rate stood at 0.16%, it was still influenced by soaring housing costs, with shelter expenses nearing an 8% increase. Lee expects these costs to start moderating and other inflationary factors, such as used car prices and core services, to also decline. He went on to predict that inflation might drop below 2% by mid-next year.
Cryptocurrency Projections: Regarding cryptocurrencies, Lee highlighted the relationship between crypto and monetary policy. He suggested that a decline in inflation could lead to more accommodating financial conditions and potential policy easing by central banks, which would be bullish for cryptocurrencies.
A pivotal part of the discussion centered around the potential approval of a spot Bitcoin ETF in the U.S. Lee emphasized that such a green light could significantly impact Bitcoin’s price trajectory. If the ETF secures regulatory approval, the resulting Bitcoin demand could exceed its daily supply, potentially driving its price to a range of $150,000 to $180,000. However, this bullish scenario hinges on the ETF’s approval.
When asked about his crypto preferences, Lee’s attention remained on Bitcoin and Ethereum, pointing to their relatively clearer regulatory status. He also referenced the recent Coinbase announcement, emphasizing the importance of Bitcoin and Ethereum as primary avenues for liquid crypto exposure.