Tom Lee predicts explosion in 2026! PMI breaks 50, Bitcoin enters expansion bull market

Fundstrat Research Director Tom Lee stated on CNBC that a bull market may arrive in 2026, with the key being the ISM Manufacturing PMI approaching the 50 threshold. The index has been below 50 for three consecutive years, with the latest at 47.9. Once it breaks above 50, the economy enters an expansion phase, benefiting risk assets. The rebound of ISM in 2020 and the subsequent Bitcoin surge verified this logic.

Why PMI Breakthrough of 50 is a Catalyst for Bitcoin

The ISM Manufacturing Purchasing Managers’ Index (PMI) has been below 50 for over three years, indicating a manufacturing contraction and sluggish manufacturing activity. The latest PMI data is expected to be released later today, with the previous reading at 47.9. Although this figure is close to 50, it remains in the contraction zone, implying declining manufacturing orders, decreasing capacity utilization, and weak corporate investment willingness.

When the PMI index exceeds 50, the situation changes. The economy enters an expansion phase, business confidence strengthens, capital begins to flow again, investor defensive psychology relaxes, and risk appetite increases. Tom Lee attributes this shift to Bitcoin’s rise. Historically, risk assets perform better during economic expansions. Bitcoin is more likely to benefit from its liquidity advantages. Increased institutional inflows and long-term capital also start entering the market.

The importance of the PMI indicator lies in its leading nature. Manufacturing PMI typically leads GDP growth by several quarters, as corporate orders and production plans reflect future economic activity. When PMI shifts from contraction to expansion, it often signals that the economic bottom has passed and recovery is about to begin. For risk asset investors, this is a signal to position early.

Four Chain Reactions of PMI Breaking 50

Increased corporate investment: Manufacturing expansion drives equipment procurement and capacity expansion, leading to a rebound in capital expenditure.

Improved labor market: Rising orders push companies to hire, with rising wages boosting consumer spending power.

Risk appetite revival: Economic expansion alleviates recession fears, shifting investors from defensive to aggressive positions.

Loose liquidity environment: The Fed may continue its easing policies to support expansion, benefiting risk assets.

Historical Validation of PMI Rebound in 2020 and Bitcoin Surge

Historical data supports Tom Lee’s view. PMI index rebounded after the COVID-19 pandemic lows in 2020, followed by a surge in Bitcoin prices. The market performance in 2020-2021 was based on expansion indicators, with market risk appetite dominating. This history provides a clear causal chain: PMI rebound → economic expansion expectations → liquidity easing → risk asset rally.

In April 2020, PMI bottomed at 41.5, the lowest since the 2008 financial crisis. Subsequently, under unprecedented monetary easing and fiscal stimulus from the Fed, PMI rapidly recovered, breaking above 50 in July and reaching 57.5 in November. During this process, Bitcoin soared from a low of $3,800 in March to $69,000 in November 2021, an increase of over 1,700%.

This correlation is not coincidental. When PMI indicates economic expansion, corporate earnings expectations improve, and investors are willing to take on higher risks. As a high-beta asset, Bitcoin often gains excess returns during rising risk appetite periods. Additionally, during economic expansion, the Fed typically maintains loose policies to support growth, providing abundant liquidity that fuels Bitcoin’s funding environment.

Lee points out several bullish factors. Easing policies are expected to continue and are still advancing at the institutional level. The number of global cryptocurrency holders remains relatively small, leaving room for market growth. If PMI surpasses 50 and the Fed cuts interest rates, it would replicate the perfect combination of 2020, creating an ideal macro environment for Bitcoin.

Tom Lee’s 2026 Optimism and Risk Warnings

Tom Lee believes there are many reasons to look forward to 2026. He expressed this view in a recent CNBC video, with a clear message: macroeconomic conditions could change in the near future. Long-term shareholders’ persistence is reasonable, and PMI is closely watched by traders. Many see it as one of the macro triggers.

Tom Lee’s expectations for 2026 are based on macroeconomic data. Growth in PMI could become a turning point, benefiting Bitcoin and other risk assets. Although further confirmation is needed, the current situation is encouraging. The crypto community reacts positively, and shareholders are holding their breath.

However, Lee’s optimistic forecast also faces risks. First, a PMI breakthrough above 50 is not guaranteed; if manufacturing remains sluggish, this catalyst will disappear. Second, even if PMI exceeds 50, if inflation heats up, the Fed may be forced to tighten policies rather than loosen, which would be adverse for risk assets. Third, global geopolitical risks are rising, with tariffs under Trump and military threats potentially triggering systemic risks. Even if PMI expands, these factors cannot be fully offset.