13 Apr Bitcoin history lesson worth noting by cryptocurrency investors
Tom Lee and his Fundstrat analysts always provide valuable perspectives on the cryptocurrency market. Today, it’s a brief bitcoin “history lesson” that investors should consider.
In this history lesson, Fundstrat looks at the 2018 bitcoin low of $5,900 and compares what happened in the 2013-2015 bear market trough:
“The most challenging time in Bitcoin’s 9-year history was the bleak “winter of 2014” (11/2013 to 1/2015), a bear market lasting 405 days, and ultimately seeing ~90% peak to trough decline from $1,183 to ~$160. However, what may surprise many, is that the 405-day bear market merely prices back to where BTC traded on 10/25/13, or 1-month prior to the peak. In other words, it was a 405-day bear market to retrace 1M of gains!”
He says investors could also look at this previous history and the present drastic decline in bitcoin value as a “rollback” to previous high values. “In other words, instead of viewing of the 2014 bear market as a 405-day decline of 90%; rather, think of it as a rollback of 1 month of gains (prior to the top)!”
Spoken like an analyst, but investors may not be able to look at the fall from $19,511 on Dec 19, 2017 to $5,900 on Feb 6, 2018 quite so objectively or dispassionately.
Will it take 405 days to recover?
The big question is how long does the Fundstrat team think it will take to retrace to the value one-month prior to the bitcoin value peak in December?
There’s good news on that front. We’re already there. It took only 52 days for Bitcoin to retrace its value one-month prior to that Dec 2017 high at $5,900 on Feb 6, 2018.
The Fundstrat team believes that now the market is primed to begin its recovery and potentially reach $20,000 bitcoin value by midsummer and $25,000 by end of 2018. They’ve been consistent in their analysis and their projections during the year to date.
What could go wrong asks the analysts?
“There are still substantial regulatory uncertainties that are curbing institutional appetite for crypto. Until greater clarity is received from the SEC, in particular, many potential investors are sidelined. In the meantime, the availability of institutional quality custody solutions is broadening, meaning the proper infrastructure is being developed.”
There are progress and encouraging signs from the SEC towards cryptocurrency regulations. No one denies the “Why?” – the need to protect investors. It’s the “How?” that’s always tricky.
Go ahead, make my day?
I’m not sure whether this makes your day as an investor or not. If you believe in the charts and the repeat pattern of a relatively short nine-year history for bitcoin investment, there may be sunshine on the horizon.
As we ended the workweek, bitcoin had recovered to about $8,000 before holding at between $7,800-$7,900 by the close of Friday.
It could be that bitcoin is poised for a recovery as projected, or it could be just another small peak amid the longer series of valleys. I guess that’s what makes cryptocurrency so fascinating to follow.
You can learn more about Fundstrat’s newsletter and advisory services at their website.
Editor’s note: Information on Blockcoin Today is not intended as investment advice. Please consult your own investment advisors for appropriate guidance and counsel.
Author: Jeff Domansky, Managing Editor
Chart courtesy of Fundstrat