Large-cap cryptos like Bitcoin have taken a lickin’ over the past few months, but based on a report from a well-respected Bitcoin player about alt-coins emerging from a bear market, the space is wholeheartedly hoping Bitcoin, and others are next.
The observation comes from Fundstrat’s Tom Lee. The Bitcoin bull has had his plate full this year covering the highly volatile world of cryptos, and in his most recent note, he comments on alt-coins.
Specifically, Lee sees alt-coins as being out of the bear market they have been stuck in for the past few months.
Let’s go over the latest findings, and what Lee sees as happening next.
Numbers behind logic
Alt-coins are those smaller tokens that make up the bulk of the cryptos in the space in terms of their numbers. In following their ebbs and flows, Lee was able to identify cycles in which they go through “purgatories,” or periods of consolidation.
He found that these cycles last for between 70 to 231 days. During such cycles, Fundstrat found that it is best that investors go with larger cryptos, such as Bitcoin.
In the report, it is noted:
“We believe the current purgatory period will last for 150-175 days, implying a bull market for alt-coins really starts mid-August to mid-September. The reason for this longer duration is the current dark clouds overhanging crypto are really alt-coin specific.”
Here’s a chart that was posted on Twitter showing the bear market emergence.
Out of the woods
In the note, it’s pointed out that while the bulk of the decline may be over, it’s still too soon to say that this segment of cryptos is now enjoying a bull market.
Fundstrat’s number crunching for alt-coins found a 75% decline in the group over the past 64 days.
The bear market emergence comes on the heels of a 62-day rally that pushed prices to unprecedented heights, Bloomberg gleaned from the note. It further noted Fundstrat’s position that:
Based on the trajectories of three previous alt-coin bear markets, where the selloffs lasted roughly as long as the surges that preceded them, the likelihood that the current drop has ended is high.
We told you in January how Lee was seeing good news for alt-coins. At that time he said that it was a good time to buy alt-coins, and that gains from small-cap coins would begin moving into the top 10 spot. He said then that 2018 would be a story about rotation among the smaller alt-coins and the large platform tokens.
Oh Bitcoin
Fundstrat’s note, coupled with positive statements made as part of the G20 summit, helped give investors a sigh of relief. Before the summit kicked off Monday, Mark Carney, the head of the Financial Stability Board (FSB), released a letter confirming the board had reviewed possible threats cryptocurrencies may pose to global financial stability.
The result? There was no such risk.
That helped push the put-upon Bitcoin higher by almost $1,000 Monday. It continued to climb steadily over the course of Tuesday afternoon. At the time of writing (New York time, 4 p.m.), it had moved above $9,000 before retreating. Still, the move was huge, considering that around the same time Sunday, it was barely, $7,400.
Lee maintains his stance that Bitcoin could reach $25,000 by the end of the year.
This article appeared first on Cryptovest