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Are there signals out there that can indicate to which direction the price of Bitcoin is going? This is a question that many crypto enthusiasts and investors are asking since the dawn of cryptocurrency. At least according to Tom Lee, the Managing Partner and the Head of Research at Fundstrat Global Advisors, there’s a place (or rather, an ETF) that can give several meaningful hints regarding BTC’s price: emerging markets.
Lee appeared in CNBC’s “Trading Nation” and offered his outlook regarding Bitcoin and the digital currency’s correlation with emerging markets:
There’s a pretty interesting relationship between Bitcoin and emerging market equities, and both really essentially peaked early this year and they’ve both been in a downward trend. So I think until emerging markets begin to turn I think in some ways that correlation is going to hold and tell us the sort of risk on mentality is those buyers aren’t buying Bitcoin.
One such emerging markets equity is the iShares MSCI Emerging Markets ETF. Whereas both the Emerging Markets ETF and the BTC price do present the same trending since the beginning of the year, the volatility of Bitcoin is much more violent; while the Emerging Markets ETF went down by about 7.5% since January, BTC dropped by nearly 50% (from about $14,000 down to $7,300).
Lee had also held an aggressively bullish vision of Bitcoin earlier this year: he had previously predicted that by the year’s end, Bitcoin could go all the way up to $25,000 – more than three over compared to today’s price. This was his answer in the interview when he was asked if he believes that Bitcoin could still reach this kind of a price:
I still think it’s possible. The problem right now is that crypto sentiment is so negative, and even those who are pretty big believers in the technology think there’s a downside; but Bitcoin hasn’t been following on two negative developments this week. We had the ETF denials, and then China issued an almost brand new ban on an expanded area of where crypto can’t be taking place, and yet Bitcoin held … Bitcoin doesn’t have to end the year at $7,000, it could end the year – in our view – explosively higher.
And if that would indeed occur, I’m certain that many Bitcoin investors would be explosively happier.