Thomas Lee Gives Key Reasons Why Institutional Investors Are Entering Bitcoin’s Crypto Market
Thomas Lee, the co-founder of Fundstrat Global, explained why there are several institutional investors entering the crypto market.
Mr. Lee has always been very bullish about Bitcoin (BTC) and a few weeks ago, Bitcoin was able to break above $5,000 for the first time since November 2018.
Thomas Lee Compares Bitcoin With the S&P 500
In a recent tweet uploaded by Mr. Lee, he compares Bitcoin with the S&P 500. He said that markets around the world have been growing since the beginning of the current year, which has been a tailwind for Bitcoin.
1/ Risk markets globally have rallied YTD big time and this is a tailwind for #bitcoin $BTC. As noted previously, S&P 500 YTD is 2.5 std dev = ~ $14,000 for BTC
It’s curious that Bitcoin correlation is now negative to equities (next tweet)
From @fundstrat_ken latest piece https://t.co/mgolqFqTbv
— Thomas Lee (@fundstrat) April 12, 2019
Lee explained that the correlation between Bitcoin and S&P 500 has hit -3.2% while that with Gold has recently reached 12.6%. At the same time, he has also shared a chart from Ken Xuan in which he shows 90-day rolling correlation between Bitcoin and different asset classes and indices.
Mr. Lee mentioned that the disparity between S&P 500 and Bitcoin is related to investors that are searching for higher returns compared to the traditional market. He went on saying that Bitcoin’s position in the mainstream financial market seems to be solidifying as time passes.
Back in December 2018, Alex Krüger, a recognized economist and investor, wrote that cryptocurrencies are mostly uncorrelated from non-crypto markets.
1/ Crypto is mostly uncorrelated from non-crypto markets. For now. As most crypto investors & market participants are not actively present in other markets. (chart shows BTC-SPY rolling correlations – despite recent uptick in short term correlations, the 180 day stands around 0) pic.twitter.com/ZKp5u0UQQu
— Alex Krüger (@krugermacro) December 18, 2018
According to Dovey Wan, the founding partner at Primitive, it would be unrealistic to think about a bull run related to institutional money entering the market. Additionally, Bitcoin and other virtual currencies are illiquid for larger players and there are no market makers that can restrain volatility.
It would be interesting to see how regulated platforms such as Bakkt and others start offering services to institutions and which will be the effect in the market.
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