Speaking with CNBC, the Bitcoin bull revealed that proprietary Fundstrat analysis indicates that the flagship cryptocurrency has begun to storm into a bull market.
Translation: prepare for the Bitcoin price to continue pounding higher.
— CNBC Futures Now (@CNBCFuturesNow) April 25, 2019
According to Tom Lee, three factors converge to confirm Bitcoin's optimistic outlook.
1. Busy Blockchain
The first sign relates to blockchain transaction volumes. Lee noted they finally turned positive on a year-over-year basis in late January.
2. The Bitcoin Price's Technical Indicators Scream Bullish
A key indicator, BTC/USD smashing above its 200-day moving average, is another wildly-positive sign. Lee said:
“Bitcoin crossed above its 200-day moving average on April 1. That’s a big technical hurdle to cover. Bitcoin hasn’t been above its 200-day for more than 13 months.”
3. Crypto Trading Volumes Ramp Up
Finally, Lee said his firm surveyed over-the-counter brokers to learn about any changes in their crypto trading activity. They are important because they show how institutional investors trade crypto, he said.
Universally, the brokers are seeing a 60% to 70% increase in activity levels. This includes the number of clients and the amount of trading per client. For both, Lee described the increases as “really taking off.”
“Fundamentals are improving, technical are improving, and now there’s real activity by essentially crypto HODLERs.”
Unleashing Global Crypto Adoption
Lee acknowledged that cryptocurrency adoption - a key fundamental indicator - has yet to take root in the United States, the headquarters of the global financial sector.
However, in countries like Venezuela and Turkey, where the local currency valuations have cratered, crypto use is on the rise. The devaluation in local currencies has “caused on-chain volumes to take off," Lee said.
“It’s real important for that to take place in U.S. for adoption because there’s a really well-established financial system. You have to remember that crypto is probably 70% a story outside the U.S.”
People in those countries are simply saying, “Look I don’t trust using the local currency,” Lee explained. That’s so much been the case that the two countries make up about 30% of the increase in on-chain activity.
Other top crypto assets have lagged the Bitcoin rally, but that doesn’t worry Fundstrat. Lee explained that altcoins typically rally after Bitcoin as traders take their profits and speculate on more volatile coins.