If you’ve been covering Blockonomi over the past few days, you know that Bitcoin and other cryptocurrencies have recently embarked on a strong rally.
Since hitting a bottom of $6,400 in December, BTC has surged by 46%, rallying as high as $9,425. In the past week alone, the leading cryptocurrency has gained 15%, managing to outpace effectively all other assets trading right now.
According to a leading Wall Street research firm, Bitcoin’s latest rally has just allowed it to post an extremely bullish technical analysis signal, suggesting that the cryptocurrency will continue to bound even higher in the coming months.
Bitcoin Prints Extremely Positive Signal
As hinted at in a previous market update from Blockonomi, Bitcoin’s latest surge higher has allowed it to retake a 200-day moving average, a sign that has traders enthused.
Fundstrat Global Advisors has been especially enthused by this technical analysis development.
The firm’s co-founder Tom Lee, who was previously an executive at JP Morgan, posted the below tweet in the wake of this occurrence, writing that this is a “positive milestone [that] reinfor[ces] 2020 shaping up to be a great year for BTC.”
Bitcoin moved back above its 200-day moving average on 1/27… positive milestone and reinforcing 2020 shaping up to be great year for $BTC #bitcoin
– whenever BTC >200D, win-rate (6M forward) jumps to 80% and essentially "re-entering" bull market (>200D)#BTD #bestasset2020 pic.twitter.com/YbpQYHpLaj
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) January 29, 2020
He then noted that per his firm’s analysis, whenever the price of Bitcoin is about the 200-day moving average, the six-month forward win rate for the cryptocurrency “jumps to 80%,” “essentially [meaning BTC is] ‘re-entering’ a bull market.”
While Lee didn’t issue a prediction, he did include the hashtags “#BTD” for “Buy the Dip” and “#BestAsset2020,” seemingly indicating that his firm expects for Bitcoin to surge a lot higher from where it is now.
Indeed. Our analysis of the charts shows that this specific technical level has been of utmost importance for Bitcoin in the previous market cycle, which took the cryptocurrency from $1,000 to $20,000 then to $3,000 all within a few years’ time.
More specifically, in 2018’s bear market, Bitcoin failed to break above the 200-day moving average on four distinct occasions. And in the uptrend that took prices to $20,000, the cryptocurrency bounced off that level on at least three occasions, again suggesting it is very positive seeing the cryptocurrency surmount the aforementioned price point.
Not Fundstrat’s Only Bullish Argument
The strong reclamation of the 200-day moving average isn’t the only reason why Fundstrat is extremely bullish on Bitcoin.
As reported by this very outlet earlier this week, Lee conveyed a number of reasons why the leading cryptocurrency could surge 100% by the end of 2020 in an interview with CNBC’s “Fast Money” panel. Fundstrat’s three primary bullish catalysts for Bitcoin are as follows:
- The upcoming 2020 Presidential Election in the US, which he claims will decrease regulatory pressure on Bitcoin
- The upcoming Bitcoin block reward reduction, known as a “halving,” that will decrease the inflation rate of the asset by 50%;
- The rising geopolitical tensions, especially in Iran.
The firm also took the anecdotal approach, mentioning that his firm has been seeing an increasing interest from clients regarding cryptocurrency. While Fundstrat is a research firm not an investment services provider, the swelling interest from clients would suggest that there is a growing investment demand for Bitcoin.
There’s also the firm’s analysis that indicates strong years in the S&P 500 correlated with strong years in Bitcoin due to the latter’s seemingly risk-on nature.
With analysts expecting this year to be strong for the stock market — Tesla is already up dozens of percent since the year started, as are other companies — BTC, too, could see stellar gains, Fundstrat’s analysis predicts.
