One of Wall Street’s biggest crypto bulls said that the bitcoin price could be primed for a breakout, as long as it continues to hold near its present level at $7,500.
Bart Smith, head of digital asset at Pennsylvania-based trading firm Susquehanna International Group, provided this analysis during an interview with CNBC, explaining that he is watching to see whether bitcoin continues to hit “higher highs” as it rebounds from the year-to-date low it set in early June.
The key support level, he said, is $6,800.
“The technicians I have talked to are concerned about $6,800. That’s the level where I think, if it breaks through, it would be negative.”
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Echoing comments made by Tom Lee, founder of Wall Street strategist Fundstrat, Smith said that it’s a positive signal that the bitcoin price did not experience a massive sell-off in the immediate aftermath of the news that U.S. regulators had denied the Winklevoss brothers’ latest bitcoin ETF application.
While the bitcoin price has shed approximately $1,000 in the week following the bitcoin ETF denial, it did not relinquish all of the gains it had made during the runup to the ETF decision and has moreover managed to hold well above the key $6,800 level.
Smith further explained that institutions have yet to grapple with the reality of bitcoin’s risk profile. Though a highly-volatile asset, large-scale buyers can actually use it to reduce the risk of their overall portfolio.
“Bitcoin basically has a zero correlation to stocks, and by going one percent bitcoin and 99 percent equities, my risk profile is lower,” he said. “Square is half as volatile as bitcoin. So if I own $100 of Square and own $50 of bitcoin, I’ve basically got the same risk on.”
Once institutions begin to think about bitcoin this way, he said, “brand-name” pensions, endowments, and insurance companies could begin to take up small positions in bitcoin — a move that would likely incite a bull cycle.
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