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Tom Lee, Fundstrat Global Advisors – Index

Global Risk Rally, Crypto Gains - Tom Lee, Fundstrat Global Advisors

Over the past 7 days, the FS CryptoFX Agg Index increased by 9.5%, compared with a 2.1% decrease for the S&P 500 (Slide 6). Amid the rising concerns related to the continuous coronavirus outbreak in China, Bitcoin rallied above $9,500 last Thursday, the highest level since early November. Although it gave up gains slightly over the weekend, Bitcoin still finished the week 9% higher than the prior one. Notably, the Bitcoin price climbed 30% in January according to Coinmarketcap which is the best January performance for Bitcoin since 2014.

Our latest take on Bitcoin
Two tailwinds we saw develop for bitcoin in the last week were (i) increasing uncertainty in terms of both disease spread and economic impact of the coronavirus and (ii) Bitcoin breaking out over its 200-day moving average on 1/27/2020. Risks posed by the coronavirus pandemic are increasing demand for “safe haven” assets like Bitcoin. Additionally, the breakout above the 200-day moving average is validating that bitcoin is back in a “bull market”; Since 2010, when Bitcoin has exceeded its 200D, its 6m forward return averages 193% and the win rate is 80%. The addition of these two factors brings our total number of positive convergences/tailwinds for Bitcoin in 2020 to five. The remaining three are (i) heightened geopolitical tensions, (ii) election cycle in 2020 (shifts Washington focus away from crypto), and (iii) Bitcoin’s block reward halvening.



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