Tom Lee Sees Strong Optimism for 2026 as ISM Expansion Could Shift Markets

Tom Lee, co-founder of Fundstrat Global Advisors, has predicted a new all-time high for Bitcoin by the end of January 2026. He sees a strong but volatile year ahead for the crypto market. Lee's forecast is based on factors including institutional repositioning and macroeconomic signals.

The upcoming ISM Manufacturing PMI report on January 5 could influence Bitcoin's price movement. While the headline index is expected to remain below expansion, sub-indexes like Prices Paid may signal inflationary pressures. This could affect expectations for Fed policy.

Bitcoin's reaction to macro data depends on how the market interprets growth and inflation signals. A sharp rise in Prices Paid could lead to higher bond yields and a stronger dollar, pressuring risk-sensitive assets like Bitcoin. Conversely, stable growth without inflationary signals could support a broader risk-on environment.

Why Is the ISM Report Important for Bitcoin?

The ISM Manufacturing PMI provides insights into supply chains, tariffs, and cost pressures. The Prices Paid sub-index is particularly relevant for Bitcoin as it reflects upstream inflationary pressures.

Higher input costs can squeeze corporate margins and push prices upward, making inflation a concern for markets. This matters for Bitcoin because it affects expectations for Fed policy and interest rates.

Supplier Deliveries and New Orders sub-indexes also play a role. Delays in deliveries or rising costs alongside firming demand can signal tighter financial conditions.

What Are Analysts Watching Next?

Tom Lee has also predicted Ethereum could reach $250,000 by 2026. BitMine, an Ethereum treasury firm led by Lee, has been accumulating ETH and plans to increase its authorized shares. The move aims to accommodate future share splits and capital market activities.

Market volatility in early 2026 is expected as institutional investors reposition. Lee described the year as having two halves: a volatile first half and a more constructive second half.

Morgan Stanley's chief equity strategist, Michael Wilson, sees a target of 7,800 for the S&P 500 by year-end. He cited factors like earnings growth, de-regulation, and monetary policy as key drivers. The ISM cycle is expected to see inflection points as lower rates and earnings revisions take effect.

Bitcoin traders are closely monitoring Treasury yields after the ISM report. A sustained rise in yields suggests markets believe inflation is returning, which could pressure Bitcoin.

The broader market environment could also see small-cap stocks leading. Lower interest rates and earnings growth are expected to benefit these companies.

Bitcoin remains range-bound in early 2026, but a single macroeconomic data point could shift the balance. Traders are looking for directional moves that could break the current stalemate.

Market positioning is rebuilding early in the year, with narratives forming around inflation and growth. A single data surprise—whether in Prices Paid or New Orders—could change the trajectory of asset classes.

The ISM report is the first major macroeconomic signal of 2026. If it shows signs of inflationary pressure, it could shift market sentiment and influence Bitcoin's price direction.