Tom Lee, an accomplished Wall Street strategist and the Head of Research at Fundstrat Global Advisors, brings more to the table than your traditional analyst that studies his technical charts ad nauseam. In his role at Fundstrat, he is in daily contact with participants in every sector of the crypto economy and, therefore, has a keen sense of the pulse of the industry. Despite Friday’s pull back over alleged dalliances at Bitfinex and Tether, Lee says that Bitcoin and its altcoin brethren are going higher. Crypto Winter is behind us, he asserts, and fundamentals and technicals are all pointing north.
In a televised interview on the “Futures Now” segment of CNBC, Lee relates:
Last year was a terrible year for crypto, a massive bear market, and we published a piece this week just highlighting … 11 signs that historically only take place in a bull market. So I think the evidence is mounting that there’s a bull market.
A sample of the more meaningful of Lee’s “11 signs” is as follows:
- “Trading volumes on the blockchain — a technology some use to buy and sell bitcoin — turned positive year over year. That boost was helped by turmoil in Venezuela and Turkey, where people losing faith in their countries’ currencies may have turned to bitcoin as an alternative;”
- In April, Bitcoin closed above its 200-Day moving average, an accepted signal that bullish momentum is present. In quick succession, the 50-Day MA also blew past the 200-Day, an event labeled as a “Golden Cross”, another positive sign;
- A recent Fundstrat survey of over-the-counter brokers revealed that activity from institutional investors is accelerating. The message from OTC desks – Trading activity derived from the number of active institutional clients is up 60% to 70%. Lee’s reaction: “I think you’re seeing signs that fundamentals are improving, technicals are improving, and now there’s real activity by, essentially, crypto hodlers (Crypto-Speak for Holders)”;
- Fundstrat’s proprietary Bitcoin Misery Index has swung back into positive territory;
- There is a general consensus among Bitcoin bulls that Crypto Winter is definitely behind us and that a firm bottom formed in late December;
- Measures that track available crypto coin supplies indicate shrinkage is occurring.
As of last March, Lee is already on the record for predicting a major bull run in Bitcoin in 2019, but he adds that the consequence of so many indicators pointing in a single direction at a single point in time is that “these catalysts are likely to drive it to new all-time highs around 2020”.
Lee also follows correlations of Bitcoin price behavior with that of the S&P 500 Index:
One thing to keep in mind is whenever the S&P has made a big move, … it’s almost always led to a big move in crypto later in the year,” he said. “So I think … a 2.5 standard deviation move for bitcoin would take it to $14,000. I’m not saying that’s where it’s going to go, but that’s the magnitude of move that would be a catch-up.
While many of the analysts that were predicting great things for cryptocurrencies suddenly went silent after last week’s Tether bombshell, Lee has been one of the first to speak out in defense of Bitcoin and previous forecasts that suggested that the 5-digit valuation realm could be a reality, sooner than most people think. In a Friday phone call with CNBC, Lee explained that issues with Tether would not have “much effect on bitcoin, since most people are long tether because [they] don’t want to be long bitcoin.”