Tom Lee says there were five big reasons why markets stumbled. He has familiar advice.

Fundstrat's Tom Lee says Thursday's washout likely brings the market nearer to a bottom and reiterates a buy-the-dip stance, favoring the Mag 7, AI, crypto, industrials, financials and small-caps while forecasting the S&P could reach 7,000 by year-end if conditions hold; he expects two weeks of choppiness before a rebound and notes the S&P is up about 11% in 2025. Lee attributes the pullback to five drivers: inflammatory social-media posts from former President Trump (political risk), anxiety over potential revelations from the Epstein Files Transparency Act that could force liquidations, a sharp fall in bitcoin (intraday ~ $86k to ~$83.7k) driven by stressed crypto market makers, widening credit-default swaps on Oracle (possible AI-hedge speculation), and a jump in the VIX to ~28. He advises monitoring corporate bitcoin holders such as MicroStrategy and watching crypto market-maker recapitalization, CDS moves and volatility as potential channels for further market stress, but still favors buying weakness.

Analysis

Tom Lee of Fundstrat reiterated a buy-the-dip stance after Thursday’s washout, saying the market is “closer to the bottom” and forecasting the S&P 500 could reach 7,000 by year-end if certain conditions are met; he also noted the S&P is up about 11% in 2025 and expects roughly two weeks of choppy trading before a rebound. The S&P 500 logged its biggest intraday reversal since April 8 despite Nvidia reporting strong numbers, indicating a disconnect between earnings strength and near-term risk sentiment around the AI trade. Lee identified five drivers for the pullback: inflammatory social-media posts by former President Trump, anxiety over potential revelations from the Epstein Files Transparency Act that could force liquidations, a sharp bitcoin decline (intraday low ~$86,010 and trading around ~$83,672), stress among crypto market-makers that he says are about six weeks into recapitalization, and “exploding” credit-default swaps on Oracle. Market-structure implications are clear: cross-asset liquidity and political/legal headlines are amplifying volatility (VIX jumped to ~28), so monitor MicroStrategy as a corporate-bitcoin indicator, CDS moves in stressed names like ORCL, and the health of crypto market-makers as proximate risk channels.

Key Decisions for Investors

• Consider selectively buying dips in the high-conviction areas Lee lists—Mag 7, AI, crypto, industrials, financials and small-caps—but scale positions over the coming two weeks given his call for near-term choppiness
• Monitor bitcoin and MicroStrategy (MSTR) price-action and public signs of crypto market-maker recapitalization, and trim or hedge crypto-related exposure if large forced liquidations or further breakdowns below recent intraday lows (~$83.7k) occur
• Use tactical hedges tied to equity volatility or credit risk (VIX instruments or CDS monitoring), and watch Oracle CDS and Nvidia-driven AI sentiment as triggers to reduce cyclically exposed holdings