Lee's Q4 Rally Call Faces Hurdles for Crypto Markets

Tom Lee's Q4 stock rally call has been met with skepticism by some analysts, particularly after the Federal Reserve raised rates less than 24 hours later. The Fed's decision makes it more challenging for Bitcoin, Ethereum, and XRP to reach new highs, as they need a significant price increase to recover from their current drawdowns.

Lee's forecast is based on his expectation that once the Fed's path becomes clearer, a large pool of cash in money-market funds will move back into riskier assets. This could lead to a rally in stocks, with Lee predicting the S&P 500 will clear 8,200 by year-end.

However, Ed Yardeni, who had one of the highest year-end S&P 500 targets on the Street, cut his target to 7,900 from 8,400 just one day after Lee made his bullish case. Yardeni attributed this change to increased risks of a downturn over the next three to six months.

The relationship between stocks and cryptocurrencies has also become less reliable, with Bitcoin's correlation with the Nasdaq 100 falling sharply while its relationship with gold has climbed to its highest level in years.