Gridlock Rally Incoming? Tom Lee Claims Midterm Surprise?

The central market thesis was that a midterm outcome producing congressional gridlock could support a rally. Polymarket put Democrats at about 66% to win the Senate, but Tom Lee said markets favor gridlock and that election uncertainty is weighing on AI stocks and crypto. Lee warned of a possible larger drawdown from mid-October through the midterms, yet described the election as a clearing event and expected it to become a risk-on signal regardless of the result. He was reluctant to call markets overextended, pointing to bearish sentiment and investor caution.

The host cited a recurring pattern of weaker equities in September followed by a sharp seasonal rise in October during midterm years, while stressing that the subsequent record is mixed. Stocks fell sharply in 2018, whereas markets were mostly sideways in 2022; the FTX collapse in November that year was a major crypto-specific shock. Lee’s expected post-election relief therefore rests on uncertainty clearing, not on a guarantee that every asset will rise. The host also noted an 83% probability of no rate change at the October 28 FOMC meeting and cautioned that an October surprise could still affect the Federal Reserve’s path.

Lee suggested that Democrats could support data centers and the Clarity Act after the midterms, potentially helping projects move forward and benefiting AI stocks. The host questioned whether Democrats would lead on crypto or whether the Clarity Act was necessary, arguing instead that SEC and CFTC appointments could be more important catalysts. In his view, a Democrat at the SEC who was not hardline on crypto could surprise markets and help advance policy. The host also said the SEC’s crypto-asset regulation proposal opened for public comment on August 18, with comments due by October 20, and observed that markets had risen as rules began to take shape.

The political stakes include Ohio’s Senate race, which the host said could influence Financial Services Committee leadership and support for Senator Warren. He described John Hustad’s race against Sherrod Brown as critical. Separately, Lee said ETH was dwarfing other macro assets, and the host reported that Lee and Bitmine were buying another 15,000 ETH, worth about $41 million. These observations put Ethereum among the episode’s strongest asset-specific themes, though the broader market outlook remained tied to election uncertainty and possible regulatory changes.

A Standard Chartered speaker argued that Uniswap has “extremely direct value capture,” linking higher token value to increased buybacks and burns. The speaker said a $100 token price by 2030 was a target and warned that annualized burns of 12–15% at a price below $3 would be unsustainable, compared with a price above $9 in the comparison. The host saw potential support for Uniswap from further DeFi growth and new kinds of investors. He also said Pump.fun was nearing an all-time high, with revenue and TVL signaling aggressive activity. Ansem said Pump could be underpriced if it became a Layer 1 used as infrastructure by other launchpads; Matt Hogan argued that traditional finance seriously underestimates social trading and memes.

The host said Solana could have an especially interesting period after the midterms, with Breakpoint a possible venue for major announcements, but made that outlook conditional in part on SEC and CFTC clarity. He also discussed a partnership between OKX and ICE, the parent of the New York Stock Exchange, which Andrew Cuomo was said to be bridging. A notice would allow 60 U.S.-listed companies to trade 24/7. The host speculated that the SEC’s innovation exemption could encourage more round-the-clock trading initiatives and that more Democrats might position themselves as pro-crypto.