Loading
Another bitcoin bull market is coming in 2019, says Fundstrat's Tom Lee
CNBC
Thu, 14 Mar 2019 19:26

Another bitcoin bull market is coming in 2019, says Fundstrat's Tom Lee

CNBC
Thu, 14 Mar 2019 19:26

2019 could mark the return of bitcoin, according to one bitcoin bull.

Another bitcoin bull market is coming in 2019, says Fundstrat's Tom Lee


The digital currency has had a difficult run since hitting its all-time high, sinking from its peak near $20,000 per coin in late 2017 to its current trading price of less than $4,000. The CME bitcoin futures curve is up nearly 6 percent year to date but has also fallen significantly from the 2017 peak.

But Fundstrat Global Advisors strategist and known bitcoin bull Tom Lee — who in December valued bitcoin between $13,800 and $14,800 — says this year could bring about a comeback for the cryptocurrency, thanks to favorable macroeconomic trends.
"I think 2019s a year about repair," Lee said Thursday on CNBCs "Futures Now." "We have a risk-on rally in global markets thats positive for bitcoin; it was a headwind last year. And the dollar isnt surging like it was last year. Thats a headwind thats gone away."

And while Lee also noticed that bitcoins technical indicators are stabilizing, with the digital currency managing to hold above its 200-week moving average, his thesis centered on the bigger picture.

"The real story is the fundamental one, that bitcoins becoming quite useful," he said. "Weve seen the launch of digital currencies by not only J.P. Morgan and Mizuho Bank, but also Facebook and some social media companies gearing up. And, of course, in places like Venezuela, where bitcoins become very large and widely used, turmoil is causing adoption growth. So I think these are really setting up for a strong ... year."

Increased awareness around cryptocurrencies may also bring them closer to becoming an official asset class, a shift that is already starting to take shape, Lee said.

"Fidelitys launching digital custody. Bakkt is going to launch an exchange. Weve already seen some high-profile endowments, and pension funds actually invest new money this year," he said. "So I think, as an asset class, its still the earliest days, but I think its too glib to dismiss the macro."

For the near term, Lee told prospective buyers to keep an eye on the 200-day moving average. If bitcoin maintains its current trading price around $4,000, "itll cross above its 200-day by August," which could help it regain the ground it lost during its price collapse in late 2018, Lee said.
"I think the damage that needs to really be repaired is that collapse from $6,000 to $3,100, which came after the fork wars with Bitcoin Cash," he said. "I think it really undermined investor confidence in sort of the dynamics around the market, so I think that bitcoins going to spend a lot of time below $6,000 sort of fixing itself."

But that might not take too long, Lee said: "I think the outside window is five or six months before bitcoin starts to look technically like its back in a bull market."

Disclosure: There is a possibility that Tom Lee and/or Fundstrat will from time to time have long or short positions in, and buy or sell, the securities or derivatives referred to in his research.