- Tom Lee, the managing partner and head of research at Fundstrat Global Advisors, sees bitcoin’s recent slump as a buying opportunity.
- He notes that bitcoin has seen similar patches of wild volatility in recent months, and that the 34% decline seen over the past two days is normal.
Sure, the wildly popular cryptocurrency plunged as much as 34% in just two days, hitting an intraday low near the $9,185 level, but Lee says that sort of whipsawing price action is normal for bitcoin.
Lee, the managing partner and head of research at Fundstrat Global Advisors, points out that bitcoin has seen similar fluctuations over the last two years. He notes that since mid-2016, it’s seen six rallies of more than 75%, and six selloffs exceeding 25%.
The chart below shows this pattern at work. As Lee puts it: “what happens in years in equity markets is months in the crypto-world.”
Because bitcoin has repeatedly shown the ability to recover from similarly-sized drops in recent months, Lee sees depressed levels as offering an opportunity for bulls to increase exposure.
“We think the best way to think about sell-offs is to look at it through the lens of retracements — how much of the prior rise is given back,” he wrote in a client note. “We view this $9,000 as the biggest buying opportunity in 2018 — and we would be buyers at levels around here.”
It would appear that Lee’s forecast for a rebound is already being fulfilled, as bitcoin has rallied roughly 20% off its overnight low.
On a longer-term basis, Lee remains extremely bullish not just on bitcoin, but on cryptocurrencies in general. He sees the total crypto market cap exceeding $1.2 trillion, with digital currencies leading the way, and he says that the newest generation of consumers are the key.
“Looking beyond 2018, adoption of blockchain is powered by millennials and outside the US,” said Lee. “Millennials are the largest population cohort at 96 million and are now just entering their prime income years — surveys show millennials have low trust in existing financial institutions and we see this demographic driving adoption.”
This article was curated from Google News. You can read the original article here.