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Bitcoin [BTC]: Tom Lee predicts three possible scenarios for Bitcoin’s price if it catches a macro tailwind

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Bitcoin [BTC]: Tom Lee predicts three possible scenarios for Bitcoin's price if it catches a macro tailwind
Source: Pixabay

Thomas Lee, the Co-founder of Fundstrat, well-known for his Bitcoin price predictions and in-depth understanding of the Bitcoin markets, tweeted about the relationship between emerging markets and the price of Bitcoin. According to his tweet, Bitcoin needed to pump up to $10,000 to $20,000 to catch up to the equities.

Tom Lee tweeted,

“CRYPTO (1/2): earlier this year, we noted the “macro” factors such as rally in risk assets plus USD no longer surging are tailwinds 4 $BTC #bitcoin
Chart shows EM in 2018 pulled down $BTC. Notice especially how #bitcoin tried to diverge in late 2018 but ultimately succumbed”

Source: Twitter | Thomas Lee

According to Tom Lee, the price of Bitcoin was facing tailwinds from rallies in risk assets as well as the US Dollar not surging. If the USD surges, the ratio of BTC/USD pair would be reduced. Tom Lee also elaborated on the relationship between emerging assets [EM] and the price of Bitcoin.

Lee implied that EM pulled the price of Bitcoin down, causing the divergence in the chart attached above. However, EM succumbed and finally crossed the price.

Tom Lee’s tweets on EM and Bitcoin price suggest a correlation between the two. From the assumption, since the EM is above the price and rising, this suggests that Bitcoin is bullish and is facing tailwind.

Lee posted the second part of the thread,

“CRYTPO (2/2): natural question is how much implied upside #bitcoin to “catch up” to macro.
S&P 500+small-cap rally since 12/24 is >2 std dev.
1-std dev for $BTC is +185% gain. “Catching up” to equities implies $10k-$20k.
NOT OUR BASE CASE. Just highlighting macro tailwind.”

Source: Twitter | Thomas Lee

Additionally, the standard deviation of S&P 500, Russel small-cap is greater than 2, but that of Bitcoin is negative 0.26. The standard deviations provided are used to calculate the Z score, which will help compare the rallies of equities, and predict the price of Bitcoin. Further, the calculation of the standard deviations and the Z score were done between December 24, 2018, and January 19, 2019.

According to Lee, Bitcoin needs to pump by approximately 185% to reach its ideal standard deviation. If the coin does so, the price of Bitcoin would be $19,635 if it undergoes the same rally and reaches its standard deviation of 2.04.

Bitcoin would be worth $20,448 if it underwent the same rally as Russel Small-cap and had the standard deviation of 2.16. The price would be $10,078 if BTC underwent the same rally as EM.





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Analysis

LocalBitcoins see steady trading volume in Russian Ruble following cash-trades exodus

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LocalBitcoins see steady trading volume in Russian Rouble following cash-trades exodus
Source: Unsplash

LocalBitcoins, the Finland-based peer to peer cryptocurrency exchange, announced earlier this month that trading in a country’s national fiat currency will be disallowed, leading many in the community to believe that countries not on the frontlines of the digital asset world would be hit the hardest. Three weeks on, some defiant trends have been noticed.

According to CoinDance, the weekly LocalBitcoins chart revealed that the Russian Ruble [RUB] recorded towering volumes, even after the June 1 cash-exodus announcement. With many expecting a drop in volume, other top countries have also seen the absence of an immediate plummet, with Moscow being the stand-out.

The first week of June saw a notable high of RUB 1,174 million in volume owing to the native currency, while the aftershock of the announcement dropped the same down by to RUB 1,104 million by the second week. The next two weeks saw the volume surge back to its May 2019 heights, with the week beginning on June 22 recording a volume of RUB 1,188 million in volume.

Source: CoinDance

On the basis of the above data, Russia is indeed a positive LocalBitcoins market.

The Finnish exchange has also been popular in South America, with its weekly volumes doing exceedingly well in the markets of Colombia, Venezuela, Peru, Chile, and Argentina, with Brazil, the only Latin American country left-out.

Buenos Aries saw its weekly volume from the initial weeks of June to mid-June drop from $13.71 million to $10.53 million, following the cash-removal announcement. In terms of the Colombian Peso, CoinDance stated that the number for the same was $9.98 billion towards the close of May 2018, and dropped to $7.16 billion by the first week of June. However, the same has since stabilized to stand at $9.2 billion.

LocalBitcoins began mulling the possibility of phasing out fiat currency trades following its inclusion under the supervision of Finland’s financial watchdog, the Financial Supervisory Authority [FSA] in March 2019. This inclusion was made days after Finnish legislators stated that cryptocurrency-based assets would be given legal status under the law. However, the act will officially come into force later in November 2019.

Additionally, several changes were made to the country’s Anti Money Laundering [AML] laws and Countering Financial Terrorism Act [CTF], which would require the exchange to follow the stated guidelines.

 





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