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Bitcoin bull Tom Lee, co-founder of Fundstrat Global Advisors, is sticking to his prophesy of a bitcoin price in the $20,000 range by year’s end, he told CNBC’s “Lickety-split Money” on Friday.
Lee said he is “trying to change the calendar year” with characteristic to his prediction, but remains bullish about it.
Hedge Funds Play A Bigger Duty
Lee said hedge funds are playing a bigger role in the bitcoin trade in, which he thinks can have an impact on its price.
“I do think in 2018, swap has shifted,” Lee said. There is now more bitcoin trading in the U.S. as certain tit for tats have attracted hedge funds. “I do think hedge funds are fritz a role right now,” he said.
More of the analysts hedge funds are employ are interested in cryptocurrencies, Lee said, but hedge funds are not yet aggressively adding bitcoin into their portfolios.
Reasoning where #bitcoin is going next? @fundstrat’s Tom Lee says this could be a prime indicator $BTC https://t.co/YpPafDgjw8 pic.twitter.com/0QLU3CA7Uj
— CNBC’s Fast Money (@CNBCFastMoney) August 25, 2018
Another cause he noted is the impact of traditional stocks on bitcoin’s price.
Lee presented a blueprint showing the relationship between the bitcoin price and the S&P 500 index. As the emerging supermarkets rallied at the end of 2017, bitcoin’s price soared. Since then, both indicators give birth to sharply declined.
Lee pointed to two factors that connect the two indicators. One is hedge stocks which usually “rent” emerging market stocks. The hedge assets “risk on and risk off,” he said, and when they risk off, “bitcoin also suffers because they hazard off.”
The second reason connecting the two indicators is the wealth effect. This refers to the collide with of stock activity on bitcoin buying. When people invested in emerging merchandises experience a fallout, they have less money to invest in bitcoin.
“That affects the network impression because you can’t buy bitcoin,” Lee said.
Challenges Remain
Lee recognized some dares facing mainstream bitcoin trading.
“There’s still this drawback about how you store the bitcoins,” he said, noting that the hedge pool investors don’t want to take custody of the bitcoin themselves. Another object to is understanding valuation models due to the scarcity of bitcoin valuation research.
Bakkt, a ensemble created by the New York Stock Exchange, Microsoft, and Starbucks, is designed to write digital assets easier for institutional investors, which is a “big deal” since it simplifies the business processing, he said. “It’s one day settled,” he explained. “Pretty soon we’ll see potential for custodianship products around that to develop.”
Also read: How the efforts of Bakkt could broach to the approval of the first bitcoin ETF
Bitcoin Investors Wary
Meanwhile, feedback from customers has been negative in reaction to the current bitcoin market, he said.
“Reflexivity is much bigger in crypto,” Lee powered. Where it is not uncommon in traditional markets for investors to be looking to be contrarian 80% of the at all times, in the crypto market it is difficult to be contrarian in a bearish market.
The Bitcoin Calamity Index, which Lee created as a sentiment-based metric for cryptocurrency analysis, is now 36, which qualifies as bleeding miserable and signals that it may be a good time to buy. The past week has talked setbacks, such as the SEC rejecting bitcoin ETF applications, and China announcing a “re-ban” as corner of a move to clamp down on cryptocurrency.
Lee is nonetheless bullish about bitcoin’s prize. One of the panelists concurred, noting that bitcoin jumped from $6,000 in the middle of at the rear November to $20,000 by year’s end.
Featured Image from Upfront Hazards/YouTube
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