Fundstrat's Tom Lee expects the cryptocurrency market to recover, helped by historical price trends and crypto-related announcements by some major companies.
Japanese e-commerce company Rakuten announced Tuesday it is planning to launch a cryptocurrency called "Rakuten Coin," according to news reports.
"The announcement by Rakuten is another example of positive developments in crypto in 2018, suggesting the large sell-off in bitcoin and others at the start of the year was an overshoot to the downside," Lee, co-founder and head of research at Fundstrat Global Advisors, said in a Wednesday report.
Rakuten did not immediately respond to a request for further comment.
On Wednesday, Lee maintained his midyear bitcoin price target of $20,000 — roughly double Wednesday's prices — and a year-end target of $25,000. Lee is the only major Wall Street strategist to issue formal price targets on bitcoin, although an increasing number of financial firms have published reports on cryptocurrencies recently.
Lee also pointed out that bitcoin's low for the year has typically occurred in the first two months of the calendar year. That was the case in six of the last seven years, he said.
Historical performance of "alt-coins" such as Zcash and ripple after sharp drops also indicates investors should avoid them until late March, Lee said.
The market capitalization of all cryptocurrencies excluding bitcoin has nearly halved to around $270 billion from a high of $511 billion in early January, according to CoinMarketCap.
Recent headlines about major companies getting into cryptocurrencies could also help prices.
"In 2018, we forecast at least 3 major publicly-traded corporations to issue native digital tokens," Lee said. "Already three major companies have announced efforts within crypto-currencies, which demonstrate that corporations may be moving towards crypto-currencies before Wall Street has embraced them."
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.