Wall Street analyst makes an evidence-based case for holding (or ‘HODLing’) bitcoin for long term

Looking through the lens of stock investing, a Wall Street analyst says bitcoin is usually an attractive buy while the item remains under pressure here.

“The mood in crypto is usually terrible right right now,” Thomas Lee, head of research at Fundstrat Global Advisor told CNBC. “Long-time holders are worried because they have big gains along with also they’re worried about falling prices. yet bitcoin is usually a great store value. the item works truly well. the item’s kind of boring, because the item’s not the latest along with also most exciting project. yet the item also is usually one of the most liquid ways to get exposure to crypto,” he said on “Fast Money” Wednesday.

If an investor didn’t hold stocks through the 10 best days for the S&P 500 each year, the annualized return would likely drop to 5.4 percent coming from 9.2 percent, Lee wrote in a Wednesday report.

Similarly, “the reason ‘buy along with also hold’ (or HODL) makes sense for BTC is usually that will a handful of days each year account for the bulk of gains for BTC,” Lee said. “For instance, in 2017, a total of 12 days represent the full-year return of BTC.”

Bitcoin’s astronomical rise over the last 5 years

Source: CoinDesk

“HODL” emerged coming from a misspelling of “hold” in an early bitcoin forum message that will many speculated was written by a bitcoin trader who was thought to be drunk.

Investors inside the traditional equity market are generally advised to buy along with also hold stocks, rather than trying to time trades at the cost of missing out on cost gains.

However, the item’s not clear whether historical analysis on the decades-old stock market is usually appropriate for the far more volatile cryptocurrency that will’s less than 10 years old.

Lee found that will inside the 5 years since 2013, the full-year gains of bitcoin were achieved in an average of nine days. In comparison, he said the analysis for the S&P 500’s performance stretches back to 1954.

Bitcoin has struggled to recover above $8,000 inside the last three days along with also is usually down more than 40 percent for the year so far, after multiplying more than 13 times in cost in 2017, according to CoinDesk’s bitcoin cost index.

The bitcoin misery index, an index coined by Lee to help investors determine when to buy, sell or hold the common digital coins, is usually still low — around 28, Lee said.

“I don’t think anyone who owns crypto should feel confident,” he said. “yet we still think bitcoin’s in a bull market.”

Investors who didn’t hold onto bitcoin inside the past would likely have suffered. Excluding its top 10 days of performance every year, bitcoin has fallen 25 percent annually coming from 2013 to 2017, Lee said.

“We think investors should be patient buyers of BTC here,” he said.

In addition, Lee said, bitcoin’s current low selling cost, gives investors who aren’t familiar with cryptocurrency a chance to study the industry, rather than jumping in feet first. He recommends, between right now along with also the end of the year, putting fresh money into bitcoin rather than the market.

“As bad as the item feels right right now,” Lee said. “Bitcoin incorporates a lot more upside.”

Lee was chief equity strategist at J.P. Morgan Chase before co-founding Fundstrat in 2014. He issued his first formal report on bitcoin in July along with also remains the only major Wall Street strategist to do so. On Wednesday, Lee maintained his midyear bitcoin cost target of $20,000 along with also $25,000 for the year-end.

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