Tom Lee: ‘Gut-wrenching’ bitcoin selloff caused by futures

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Tom Lee: ‘Gut-wrenching’ bitcoin selloff caused by futures

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Despite a small uptick in today’s bitcoin and cryptocurrency values, one day does not a recovery make.

cryptocurrency uptickFundstrat Global Advisors co-founder and analyst Tom Lee blames the 20% drop in bitcoin value and volatility in the past week partly on the impact of Cboe and CME futures expiration.

Not to mention the “awful” sentiment and other technical factors affecting the cryptocurrency market.

The Bitcoin Misery Index remains in negative territory.

Bitcoin Misery Index

Futures expiration dates impact the market

Lee says the institutional investors are just not in the market yet.

“The broader implication, in our view, is that there is just not sufficient inflows into crypto— something we discussed last week. There is an increase in net supply this year due to ICOs, mining rewards, capital gains taxes, while absorption has been hampered by slow progress on the creation of institutional tools.”

He cites six key factors that impact coin values:

  1. SEC uncertainty (favors BTC)
  2. VanEck ETF/other BTC ETF (favor BTC)
  3. Institutional custody (BTC)
  4. Re-launch of Visa/MC Bitcoin Debit cards (favor BTC)
  5. Crypto-bear market (favor BTC)
  6. New capital flowing into ICOs (favors Altcoins).

Still bullish on bitcoin

Bitcoin Cash risingLee said he is still bullish on bitcoin although it is influenced by supply and demand dynamics and news headline risk.

He believes bitcoin will stabilize in the short-term relative to altcoins, while altcoins will be more attractive in late-August/late-September.

Fundstrat analysts expect bitcoin to stabilize after the post-June futures expiration but “altcoin purgatory” will continue until mid-August to mid-September.

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