Updated: May 13, 2019
BTC began June at $7500 and ended at $6300 -16%. Possible reasons for the slide. An unspoken reason - regulatory action on advisers and crypto funds improperly structured. Redemptions would require selling of the underling. Additionally smart large money already participated in the game and now wants to see actual use cases start to be made for these coins (esp altcoins). Realizing this may not happen for another two years helped push this leg lower on small volume. The last two weekends saw the usual heightened volatility. The first was a downside slide. This past Friday evening changed course and produced a 10% rally. A strong factor for this was Mohamed El-Erian speaking on CNBC about Bitcoin. "It will be a means of exchange," "it's not going to be a currency, it's going to be another commodity-like asset out there that you can trade, and mainly as a store of value." This has been a foundation for our outlook on Bitcoin and several other coins, so we highly agree with him. Major players in the capital markets listen when El-Erian speaks. He also said "Bitcoin is a buy below $5000." This did two things. 1 Potentially put a floor in BTC. 2 it shows his approval of it.
For July. There is still the Tether story which could produce significant downward pressure. Over Bitcoin's history it has seen three major 70% or greater selloffs. We are in the third one now and this one is a double bottom. $5800 was reached in February and again in June. To close on a positive note BTC sees on average 5 to 6 days a year where it moves significantly upward. One of these happened following February's slide. So that leaves us with potentially 4 to 5 in the deck for the back half of the year.
Long BTC. This narrative is not investment advice. Please contact us regarding investing.
Digital Asset Investment Management is a licensed Registered Investment Adviser specializing in Bitcoin for 401k's, IRA's and Traditional Brokerage accounts. Learn more at www.daim.io