Fundstrat’s Tom Lee believes 2019 holds a significant positive turnaround for the cryptocurrency market as a whole despite the prolonged bear market conditions that characterized 2018. The Fundstrat co-founder says an imminent tailwind of positive incremental improvements will drive another bullish rally for cryptocurrency prices.
“Flippening” Market Factors
As part of its 2019 cryptocurrency outlook, Lee says the company expects marked improvements in the cryptocurrency market after a difficult 2018. An excerpt of the report published on Twitter shows a summary of the company’s verdict on the events that shaped 2018 and its forecast for the year to come.
According to the report, the negative variance between major developments and industry expectations led to investor fatigue. This fatigue consequently led to sell-side pressure that ultimately expressed itself in a prolonged bear market.
For Lee, the hype over significant developments surrounding custodial solutions and institutional investments couldn’t trigger any significant price rallies in 2018. Speaking to CNBC on February 8, 2019, Lee identified seven “headwinds” that exerted negative pressure on the market.
In the report, Fundstrat analysts put forward the same argument, noting the emergence of a “flippening” in these market factors. According to the report, there are now far more positive influences than negative ones on the cryptocurrency market as a whole.
Some of the positive improvements that form part of the coming tailwind for the cryptocurrency market include weakening dollar, institutional-grade custodial solutions, and improved fiat-to-crypto inflows.
In January 2019, for instance, Fidelity announced that its custody platform would go live in March. Bakkt, the Intercontinental Exchange (ICE)-owned physical Bitcoin futures trading platform, also launches sometime in Q1 2019.
Expect Higher Cryptocurrency Prices
As part of the report, Fundstrat analysts say the convergence of these positive market fundamentals will manifest in higher cryptocurrency prices. Back in 2018, Lee consistently maintained an end-of-year price forecast of $25,000 for bitcoin which failed to materialize.
The counterargument for Fundstrat’s analysis potentially comes from ascertaining the impact, if any, of these market fundamentals given the changing dynamics of the cryptocurrency ecosystem as a whole. There are a slew of reports that claim many of the prolonged price pumps of the past were orchestrated via wash trading and other forms of market manipulation.
The market of stricter regulations across Asia and the cryptocurrency ecosystem in 2018 could severely affect the impact of such activities. Before 2018, positive adoption developments coincided with periods of the prolonged rallies. However, despite a slew of such announcements trading including Fidelity and ICE, cryptocurrency prices rarely registered a blip.