Bitcoin broke above US$4 000 for the first time since early January, a milestone seen as significant by at least one well-known crypto bull after weeks of sideways trading.
“Round numbers are important,” said Tom Lee, co-founder of Fundstrat Global Advisors. “Certainly getting back up above $4 000 and decidedly breaking above it would be really helpful.”
It’s a key level for many close watchers of the coin, who painstakingly saw its price lurch lower in 2018. Bitcoin fell close to $3 150 in December, a staggering 80% drop from a record $19 511 just a year prior. Monday marks the first time it crossed the $4 000 level during weekday trading since 9 January.
A number of tailwinds are building that could help bitcoin’s price recover, said Lee. The dollar, for one, isn’t as strong as it was last year and emerging-markets stocks have recovered. In addition to regulated infrastructure being built around cryptocurrencies, pension and endowment funds are also starting to invest in coins.
“There have been good fundamental developments in the industry over the past few months,” said David Tawil, president of crypto hedge fund ProChain Capital. “Investor capital is coming in, and speculator capital seems to continue to depart. There may be one more flushing out before the currencies begin a steady and strong march upward.”
Repair
This year is about the repair of the crypto market, said Lee. “The last few months of 2018 saw just a massive breakdown of bitcoin due to the contentious hard fork wars of bitcoin cash,” said Lee. “If time is needed, then 2019 is the year where the market starts to build better risk-reward and then the breakout happens next year.”
Conclusions can’t be drawn until bitcoin recovers its 200-day moving average, or the $5 400 level, said Lee. “I wouldn’t draw sweeping conclusions. At the bottom, people won’t be bullish — they’ll be more bearish.” — Reported by Vildana Hajric, (c) 2019 Bloomberg LP
