Bitcoin Back in a Bull Market, Trend Says Price Would Jump Above $17,500: Tom Lee
- Whenever bitcoin breaks back into its 200-DMA its average six-month gain is 197%
- Coronavirus and geopolitical tensions improving bitcoin’s use case
- Bitcoin’s correlation with the S&P 500 flipped negative but reacted positively to China’s equity market reopening
After becoming the best performing and the hottest asset of the decade, Bitcoin is up over 26% YTD and staying above $9,000 level.
The world’s leading cryptocurrency is currently trading above its 200-day moving average which according to Bitcoin bull Tom Lee, the founder of independent research and advisory firm Fundstrat is a significant signal for more gains ahead.
“Anyone who’s a trend follower knows when you’re above your 200-day [moving average] you’re back in a bull market,” Lee said.
“Whenever bitcoin breaks back into its 200-day, its average six-month gain is 197%, so we’re sort of talking about a levitation taking place.”
On Jan 28, Bitcoin broke above its 200 DMA, calculated at $8,903 which means by July we could go as high as $17,500.
— Thomas Lee (@fundstrat) February 5, 2020
Mati Greenspan, founder of Quantum Economics echoes similar sentiments as he noted in his daily newsletter that as long as Bitcoin trades above the 200DMA, it is “quite promising” and “the less people will fear that the recent gains might be erased by a Bart.”
Currently, he said the crypto market is in consolidation and giving a “very healthy test” of the new price levels to see if they are “sustainable.”
Geopolitical events improve the use case
Bitcoin’s strong move came during the time when fear over the spread of the deadly coronavirus across the globe has rattled investors. These investors have been jumping into safe-haven assets like gold. And a rise in Bitcoin’s price during the same time, Lee estimates further supports the theory that bitcoin is increasingly seen as a safe haven asset class and digital gold.
“These geopolitical events including coronavirus and geopolitical tensions really improve the use case,” said Lee in a new interview with Yahoo Finance.
However, not everyone has the same opinion. Entrepreneur Alistair Milne feels instead of driven by coronavirus scare, Bitcoin is rather a gateway for people speculating in altcoins.
“The whole ‘Bitcoin is a safe haven, that's why its going up during the Coronavirus scare' narrative is wrong imo. More likely: people who can't get out to gamble are playing with shitcoins … and Bitcoin is their gateway,” said Milne.
Poised to become a safe-haven asset
It wasn’t even the first time in 2020. Earlier this year, US-Iran tensions reignited the question of bitcoin being seen as a safe-haven asset. At that time, Bitcoin responded to the political tensions, spiking 5% in comparison to a 3% increase in oil price and 2% in gold’s price.
“While these events alone don’t constitute a trend, they prompted some to revisit the question of whether BTC may be poised to become a safe-haven asset, like gold, in times of geopolitical turmoil,” said SFOX in its latest report.
While over the past three months, bitcoin’s correlation with the S&P 500 has flipped from positive 13% to negative 10%, Coin Metrics notes the world’s leading cryptocurrency reacting to China’s equity market reopening after the Spring Festival.
While China’s equity markets reopen to see most shares falling by the daily limit within minutes, Bitcoin price went from just above $9,400 to over $9,600.
This “adds to the growing body of evidence that BTC reacts to global events,” stated Coin Metrics.