Tom Lee on Bitcoin: Long-term potential, yes, but no to trading at this time


The dust is beginning to settle from last week’s demolishment of Bitcoin’s valuation, and the time is now right for respected analysts to speak up on its behalf, since the all-important Bitcoin narrative needs a boost at this time. One analyst, who has never shied away from speaking glowingly about Bitcoin’s prospects, has been Tom Lee, Co-Founder, Managing Partner, and the Head of Research at Fundstrat Global Advisors, an independent research and strategy that focuses on sector analysis. Tom is back in the news, touting Bitcoin as a long-term play, but counseling traders to stay away for now.

Why is this outspoken advocate of all things crypto suddenly backing away from BTC, as a good trading vehicle at this time? Tom, like many other analysts, believes firmly that the fortunes of Bitcoin are in some way tied to those of the S&P 500 Index. Like others, as well, he attributed last week’s Bitcoin beating to the chaos that was roiling global financial markets and rocking S&P stocks across the board, but for Bitcoin to move north again, the S&P needs to get back on track and establish new trend lines.

According to Live Bitcoin News, Lee professed:

Bitcoin is vulnerable, but I don’t think the thesis is broken. So, if someone saying does this mean bitcoin’s a broken story now, I mean, I think long term holders should not worry… The S&P being trendless is not good for bitcoin. The S&P needs to make a new high before bitcoin can break out.

Lee is also known for many significant quotes that have consistently rung true. He was one of the first to state that Bitcoin had formed a firm bottom in December, stating eleven “signs” as support for his prediction. He has also heralded Bitcoin as a “Safe Haven” hedge that portfolio managers should not do without and was one of the first to state this position. But Tom also believed that BTC would end 2018 back in the $15,000 to $20,000 range, a reason why Tom and his firm have stopped making such forecasts.

As for this year, we reported last April one of Lee’s more accurate predictions: “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.

In late June, Bitcoin crested at roughly $13,800, before pulling back, a new All-Time-High (ATH) for the year.

He also was not surprised by last week’s day of reckoning for Bitcoin enthusiasts. He noted that Fundstrat’s proprietary Bitcoin Misery Index had been trending in territory that suggested a major correction was imminent. After topping out in July, Lee had previously mentioned that their market sentiment index had declined to a “66” reading. If it headed further south to “50” and below, the market would react in a more than troubling way.

Previous predictions aside, Lee remains positive about Bitcoin’s future prospects. He is convinced that Bitcoin will make a comeback and recover. He senses that the halving event in May of next year will also boost BTC fortunes, well before that date arrives.

Lee, however, still counsels caution for now:

The most important thing is the halving next year, but if someone is trying to trade bitcoin, it’s been treacherous because the S&P is unpredictable, and it’s been volatile. I don’t know how anyone could be trading bitcoin right now.

As “treacherous” as trading Bitcoin has been of late, Lee is positive about its long-term potential, thereby suggesting a shift at some point will welcome traders back to the arena. We would be remiss if we did not mention another of Tom’s previous predictions, even if he and his firm have decided to back away from that practice. He is on the record for predicting that Bitcoin will establish a new ATH north of $20,000 in 2020. Time will tell.


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