Bitcoin is about to play catch-up to other risky assets

in #bitcoin5 years ago

Is it possible that bitcoin is about to play catch-up to other risky assets?

According to Tom Lee of Fundstrat, that is likely going to be exactly the case.

Since December 24th, equities have rallied significantly, bitcoin not so much.

The premise is that since bitcoin has been mostly correlated with risky assets over the past couple years, it likely trades with them going forward, at least in the near term.

Specifically that of Emerging Markets and Small Cap equities.

Why does Mr. Lee think bitcoin is about to rally?

He bases these thoughts off of data science.

Since December 24th, US equities have moved up roughly 2 standard deviations. Small Caps have moved up roughly 2 standard deviations. Emerging Markets have moved up roughly 1 standard deviation.

As we mentioned, bitcoin is most correlated with Small Caps and Emerging Markets.

In fact, we can see that bitcoin followed Emerging Markets very closely starting just before 2016:

(Source: https://twitter.com/fundstrat/status/1107287109340200960)

And since that time, bitcoin has been flat...

How much does this imply prices might rally?

If we apply that same standard deviation move up that EM and Small Caps have seen we get a bitcoin price of $10k-$20k, respectively.

That would be anywhere from 3X-5X current prices.

Lee was quick to say that this is not their base case going forward, but he does think that bitcoin is about to play catch-up at least to some degree.

Whether it "fully catches up" is anyone's guess, but if there is any catch-up at all there is plenty of upside from current prices.

(Source: https://twitter.com/fundstrat/status/1107287109340200960)

What do you think, is he going to be right?

Personally, I think he is going to be proven right.

With the FED no longer raising rates, the dollar not strengthening any more, and other risky assets performing well, not to mention strong fundamental developments for the currency, I think we have some nice tailwinds for bitcoin right now.

I would not be surprised to see bitcoin test $6k within the next couple months.

Stay informed my friends.

-Doc

Sort:  

We are on the right track

Things should start to get fun again here soon.

Please be right. This crypto winter has been exhausting.

I agree. I think he will be, at least to some degree.

I'm ready for it to go up!

I watch a guy on magic tcg investing and it seems there market has bottomed and is starting to turn around as well. It will be interesting if the cards start to top out just before the crypto market as this might ne a leading indicator for crypto as unlikely as it maybe.

Posted using Partiko Android

Crypto tends to be pretty far right on the risky asset spectrum, so possibly.

Just in time for an after-tax-season bump and a mini bull run in the summer.

Yep, things could be setting pretty well for a nice little run here.

Last year we started a nice rally in March that ended in May. Might we see something similar this year? It's possible.

In 2017 we had a very nice rally in the Spring.

To listen to the audio version of this article click on the play image.

Brought to you by @tts. If you find it useful please consider upvoting this reply.

Your words in Gods ears 🙏🙏🙏
Have a wonderful week
Tom

Posted using Partiko Android

Hopefully! Eventually Tom Lee is going to be right... I hope.

What you wrote: Is it possible that bitcoin is about to play catch-up to other risky assets?

What we read: Are things getting fun again?

It can only go one of two ways!!!

Very true. Which way do you think we are about to go?

Congratulations @jrcornel! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :

You published a post every day of the week

You can view your badges on your Steem Board and compare to others on the Steem Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

To support your work, I also upvoted your post!

Do not miss the last post from @steemitboard:

Are you a DrugWars early adopter? Benvenuto in famiglia!
Vote for @Steemitboard as a witness to get one more award and increased upvotes!

Coin Marketplace

STEEM 0.35
TRX 0.12
JST 0.040
BTC 71539.00
ETH 3603.23
USDT 1.00
SBD 4.75