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Tom Lee of Fundstrat fame is back in the news, and he’s being very serious when he says the S&P needs to experience a breakout if bitcoin is going to gain its momentum back.
Tom Lee: If BTC Is to Do Well, the S&P Must Do Well
Lee has commented about this in the past. He’s convinced that BTC and the S&P share some very strong ties, and when one drops, the other is sure to follow. As of late, there appears to be a hint of truth to what he’s saying in that as the stock market has shown rockiness, bitcoin has ultimately tanked in a way nobody could have foreseen.
At press time, bitcoin has fallen below the $8,000 mark and is trading for around $7,928.
Bitcoin is vulnerable, but I don’t think the thesis is broken. So, if someone saying does this mean bitcoin’s a broken story now, I mean, I think long term holders should not worry… The S&P being trendless is not good for bitcoin. The S&P needs to make a new high before bitcoin can break out.
As of late, the stock market is just as Lee describes – trendless. It goes up and down at a moment’s notice, while no specific stocks seem to be taking on any distinct shapes. There is simply too much up-and-down behavior, which explains bitcoin’s erratic maneuvers.
Lee also states that the sudden drop in the BTC price isn’t a shock to him. Last July, he stated that the Bitcoin Misery Index – a platform that measures sentiment towards bitcoin – had reached a relatively low 66, and if things fell below 50, the market was going to be in big trouble.
That said, he’s still confident that bitcoin is going to recuperate in the coming months. This May, bitcoin is set for another halving, in which miner rewards are set to be significantly reduced, making the cryptocurrency harder to extract. This will increase the “rareness” of BTC and potentially ensure that all circulating units increase in value.
The most important thing is the halving next year, but if someone is trying to trade bitcoin, it’s been treacherous because the S&P is unpredictable, and it’s been volatile. I don’t know how anyone could be trading bitcoin right now.
No More Predictions
Lee has made a real name for himself when it comes to predicting the bitcoin price. Lee consistently made headlines in 2018 – arguably the worst year for bitcoin in some time – by repeating the notion that the currency would end the year in the $20,000 range, just like it did in 2017 despite all the negative movements its price was making.
When none of these predictions came true, Lee commented that he and his team would no longer focus on predicting the price and concentrate more on its trends.