On Squawk Box, Fundstrat Global Advisors head of research Thomas Lee said that despite the 16-month correction, bitcoin is en route to a steady accumulation phase throughout 2019.
In the past 24 hours, the bitcoin price experienced a roughly 2.7 percent recovery following a slight pullback, climbing to $5,055 and leading a nearly $8 billion crypto market recovery.
The slight retrace came after an impressive 19 percent rally of bitcoin from $4,200 to $5,000, a price movement analysts like Lee believe was crucial in rekindling the momentum of the market.
According to Lee, whales that bought bitcoin very early on who sold some of their holdings when the asset hit a price of $20,000 have started to accumulate the dominant cryptocurrency.
The researcher suggested that many investors in the cryptocurrency market likely kept cash on the sidelines waiting for a viable opportunity to invest in the asset class once again, demonstrating the confidence of investors in the long-term trend of the market.
“Bitcoin had a rough 2018 and for much of 2019, it’s been steadily climbing, and from what we can gather, it’s because there have been positive things taking place. You know a lot of the old whale wallets are buying bitcoin so it’s been slow accumulation.”
Throughout the past four months, bitcoin has arguably seen more progress in institutionalization than in the past 9 years from 2009 to 2018.
Financial institutions in the likes of Fidelity, ICE, and Nasdaq have actively been strengthening the infrastructure supporting cryptocurrencies while major conglomerates in Asia such as SBI Holdings, Samsung, and Kakao have also started to get involved in the cryptocurrency sector in meaningful ways.
With the strong rally of bitcoin on April 1 and the change in the sentiment of the cryptocurrency community, Lee said that the past five days have shown the presence of dry powder in the market.
“[Whales are] some of the original owners of bitcoin. Some of them who liquidated at $20,000 are starting to buy back. And then we saw positive developments like Bakkt is coming, a lot of infrastructure like Fidelity custody, activity has been picking up especially in regions with inflation and political issues like Venezuela and Turkey. I think finally we had a big move on April 1. It was real evidence that there was a lot of dry powder.”
Throughout the past two months, cryptocurrencies have begun to show independent price movements for the first time in many months.
Historically, the price of alternative cryptocurrencies has more or less followed the price trend of bitcoin with intensified movements. For instance, if bitcoin went up, alternative cryptocurrencies surged, and if bitcoin dropped, alternative cryptocurrencies plunged.
However, in recent weeks, crypto assets have shown price movements independent of bitcoin, with tokens such as Theta, OmiseGO, and Decred recording gains in the range of 8 to 20 percent on the day.
As suggested by ShapeShift CEO Erik Voorhees, the cryptocurrency market is demonstrating signs of maturation, and independent price activity is another indicator that the cryptocurrency sector is growing at a rapid rate.