Tom Lee said a move toward lower rates and less restrictive policy would support crypto.
- Tom Lee said on Friday that September inflation revisions could show the Fed tightened too early.
- Revised PCE methodology may lower core inflation readings by 0.2 to 0.4 points.
- Lee claimed the gap’s causes didn’t affect most households. “The average person, the only real expense they have for memory is the phone they’re carrying in their pocket,” Lee said.
A new measure of inflation might shave as much as 0.4 percentage points off of core personal consumption expenditures (PCE), Tom Lee said. The shift, due out Sept. 30, could signal the Fed hiked rates too soon, he said, adding a switch to neutral policy is good for Bitcoin (BTC).
Lee told CNBC on Friday that the government will publish a new way of calculating the personal consumption expenditures price index on September 30. That index, known as PCE, is the inflation gauge the Federal Reserve watches when it sets interest rates.
Could Inflation Fall Enough To Make The Fed Less Hawkish?
Lee said the change alone could take 0.2 to 0.4 percentage points off the annual reading. That would pull core PCE, which leaves out food and energy prices, from 3.4% down to around 3%. He said other pressures in the data should also ease in the months ahead, including tariffs, flash memory prices and the fees investors pay to manage their money.
Lee said any decline would not be the Fed’s doing. “If inflation starts to decline, this is not because of the Fed hikes that happened last week. It’s because of the policy that’s already in place,” he said, adding that it means “the Fed could actually walk back some of that hawkishness.”
CNBC’s Scott Wapner questioned whether a methodology change would alter the underlying inflation. “You may look at methodology to get your inflation number differently, but that doesn’t mean that the inflation itself is necessarily changed,” Wapner said.
Lee said the components driving the gap did not affect most households. “The average person, the only real expense they have for memory is the phone they’re carrying in their pocket,” according to Lee.
What The Tape Did
The market did not shrug off the hike in real time. Bitcoin’s price traded near $77,000 in the days before the Fed decision, and spot Bitcoin ETFs saw $450.33 million of redemptions on September 15 and another $295.98 million on the day of the decision, according to SoSoValue.
Flows turned positive the next day and have stayed positive since, a nine-session run led by nearly $1 billion on Monday and over $714 million on Tuesday. The pace has since slowed, with $134.47 million on Friday. Bitcoin climbed back above, reaching levels last held in late January.
Bitcoin’s price was trading flat over the past 24 hours. On Stocktwits, the retail sentiment around BTC remained in the ‘bullish’ zone, while chatter around it stayed at ‘normal’ levels over the past day.
Lee’s Crypto Read
Lee made the crypto argument more directly, speaking to Coinage on Thursday. He said the market’s response to the hike showed the Fed had “already reached maximum pain,” and that policymakers were “probably going to walk back that hike.” He said the next move was back toward neutral, which he called bullish for crypto.
The Fed raised its target range to 3.75% to 4.00% last week, in a unanimous 12-0 vote, its first increase since 2023. Chair Kevin Warsh said inflation “is too high and has been for too long.”
Lee is chairman of BitMine Immersion Technologies (BMNR), which holds the world’s largest corporate Ethereum treasury.
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