Bitcoin Price Breaks Above $7000, Expert Says Bitcoin May End Year ‘Explosively’
Bitcoin, the worlds largest cryptocurrency by market capitalization, has surpassed $7,000 early on Tuesday after breaking out of the $6,800 mark.
If the level is broken and the price goes above the $8,000 mark, then with a high degree of probability it will be possible to talk about a trend reversal.
But it takes more than that for Bitcoin to regain traders’ trust. Its price still gravitates around the $7,000 limit, but all signs suggest that the prospects are optimistic, as traders of bitcoin have come to realize, periods of low volatility often come to a boisterous end.
Mr Lee of Fundstrat Global Advisors speaking on CNBC stated: “In general, we thinking mining and fundamental factors like network effect really drive bitcoin’s value. But macro factors have an effect on network value.”
According to Lee, “Emerging Market actually rallied into the end of the year we had a huge bitcoin rally and as EM has since fallen we have seen bitcoin fall sharply.
“You might wonder ‘what’s the linkage? Why do we think they’re connected?’. Well, there are two factors.
“The first is hedge funds, which typically rent emerging markets stock. So they do risk on, risk off. When they are risk off bitcoin also suffers because they are risk off.
“The second reason has to do with wealth effect. Wealth effect means if you’re living in an emerging market and you see your stock market fall hugely it means you have a lot less money to buy bitcoin so that affects the network effect because you can’t buy bitcoin.
The MSCI Emerging Markets Index, which is down almost 8 percent so far this year, is used to measure equity market performance in emerging global markets.
According to Lee,“Until emerging markets begin to turn, I think in some ways that correlation is going to hold and tell us what sort of the risk on mentality is those buyers aren’t buying bitcoin.”
Lee went on to state that if the dollar weakens and the Federal Reserve halts its hike rate policy then both areas of the market could surge, and “I still think it’s possible.”
Adding “Bitcoin could end the year explosively higher.”
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