In an interview for CNBC’s Fast Money on Sept. 13, Lee broke with the narrative that traders purchase into Bitcoin to hedge macro dangers — viewing the asset as a safe-haven asset or form of virtual gold.
Instead, he argued that traders purchase into the cryptocurrency once they really feel constructive concerning the wider financial system, geopolitics and trade and conventional markets are booming:
“Bitcoin has stalled recently because the macro outlook has stalled. In a world without trend, Bitcoin doesn’t go up. So I think the next big catalyst is a decisive breakout in the equity markets because once equities reach an all-time high, Bitcoin becomes a risk-on asset.”
“Bitcoin may be ambidextrous”
The strategist mentioned that Fundstrat has lately equipped its shoppers with an research indicating that during the last ten years, the 3 or 4 absolute best appearing years of the S&P 500 index have all coincided with the most efficient years for Bitcoin. The cryptocurrency, he famous, seems to thrive when he S&P is up through greater than 15%.
While Lee’s number one argument at once countered the perception that traders flip to Bitcoin as a hedge in opposition to a bleak macroeconomic local weather, he didn’t cut price the chance that Bitcoin will have legs each as a risk-on and as a risk-off asset:
“Bitcoin may be ambidextrous: it works well in a risk-on world, but when you start to get nervous, then you treat it like digital gold. What we had in the summer […] was a market that looked like it was on a precipice, that looked like it could fall — but it never did. And I think getting stuck in that trend was bad for Bitcoin.”
He additional famous that if the fairness markets do reach breaking out to all-time-highs and central banks stay supportive, then robust liquidity will waft into Bitcoin.
In this type of state of affairs, he urged, an much more vital issue could be a concomitant pastime in obtaining volatility, which might function a robust pull issue for the cryptocurrency.
As famous, Lee’s forecast breaks with an opinion prevalent amongst many marketplace analysts rising choice of traders are having a bet on Bitcoin as a hedge in opposition to macroeconomic and geopolitical upheaval — to offset, for instance, the dangers related the protracted United States-China industry battle.
In August, recent information from Bloomberg printed that the correlation between Bitcoin and gold had nearly doubled in contemporary months — one thing that would seem to additional consolidate the safe-haven asset viewpoint.
Parallel to this rising reputation of Bitcoin’s distinctive homes as a non-sovereign and protected retailer of worth right through unsure occasions, analysts have additionally forecast certain reverberations for the Bitcoin markets within the context of central banks’ proceeding insurance policies of economic easing.