Fundstrat chief investment officer Tom Lee says Bitcoin’s (BTC) recent strength is foreshadowing future rallies in another asset.

In a new interview on CNBC, Lee says that BTC’s strong rallies over the last quarter are a sign that investors have a high-risk appetite and that future rallies in the S&P 500 are to be expected.

“It’s really telling us investors are pro-risk. I do think it also just signals how much capital has been idle for the last couple of years, either parked in money market cash or waiting to see if the economy survives. So I think Bitcoin rising is, to me, breaking out of a holding pattern is a precursor to what the S&P is going to do for the rest of the year.”

Lee recently said the dwindling supply of available BTC for sale will likely be felt once Bitcoin shatters the psychological price point of $100,000.

Looking at the Federal Reserve’s rate-cutting cycle, Lee says that contrary to popular consensus, fewer rate cuts next year may actually be better for risk assets because it elongates the Fed’s dovish easing cycle.

“I think there’s a conceptual change that the market has to get used to which is, let’s say earlier this year when the Fed started cutting, people thought five cuts is good for stocks in 2025, so if the number gets reduced, it’s bearish.

I think as we get into 2025, the market is going to shift into thinking the fewest cuts possible next year is the best case because it elongates the dovish cycle. So I think we have to flip the script, but it’s going to take some time.”

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