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Fundstrat Global Advisors co-founder and head of research Tom Lee earlier hinted that Bitcoin's bullish movement is a precursor to a strong stock market recovery.
Bitcoin has recovered to the pre-"Liberation Day" or Apr. 2 price level when President Donald Trump hiked tariffs on nearly all the countries. Its price action suggested a massive recovery in the stock market soon, Lee said in an interview on CNBC’s Squawk Box on May 5.
Prominent assets such as Tesla (Nasdaq: TSLA), the Magnificent Seven, or Bitcoin have begun recovering. Bitcoin's recovery is indicative of S&P recovering towards 5,800 points in the near term, Lee said.
Let's see if Lee's prediction came true.
On Apr. 2, Bitcoin was around the $87,000 price level, and the cryptocurrency couldn't scale back to the level until Apr. 21. It reached the $100,000 level on May 8 and was trading at $104,589 at the time of writing, as per Kraken.
As far as the S&P 500 index is concerned, it was trading at 5,670 points on Apr. 2. But it soon slipped below 5,000 points in the aftermath of the "Liberation Day" announcement.
The index finally recovered to pre-Apr. 2 level toward the beginning of May before retreating again. It closed at 5,886.55 points — as Lee had predicted — on May 13 as the U.S. and China reached an agreement over the weekend.
It is possible for the S&P 500 index to reach new highs this year, Lee said in the interview. Companies have even survived shocks such as the COVID-19 pandemic, so it won't be difficult for them to survive the tariff war too, he added.