Bitcoin’s performance in January 2020 turned a lot of heads in the industry. However, wherever there is talk of a spike in price movement anywhere in the digital assets industry, there is also talk of strong volatility.
Having said that, Fundstrat’s Tom Lee has claimed that the recent surge in the price is backed by a key fundamental signal.
In a recent interview with Yahoo Finance, Lee asserted that Bitcoin‘s uptick of 30 percent came at a time that overlapped with the outbreak of the novel coronavirus and rising geopolitical tensions between major nations including the United States and Iran. Such a situation has improved Bitcoin’s use cases as the global equities market is getting shaken up in the U.S and abroad due to the aforementioned events, Lee claimed.
Factually, the aforementioned statement is true as over the last three months, Bitcoin’s correlation with the S&P 500 underwent a reversal from a positive 13 percent to negative 10 percent. Such a flip would suggest that market volatility could take the world’s largest crypto-asset higher in the coming weeks. Lee added,
“Enough times in the past, post the starvation of capital, like the space hasn’t seen any capital inflows, the only good projects are surviving now, so there is actually a lot of interest in looking at what’s still alive, because these things actually have real progress and fundamental values, so I think it is a really good time to look at crypto.”
However, the key signal observed by Tom Lee is that Bitcoin’s price recently moved above the 200-day moving average on the charts. According to Lee, historically, whenever the price has hovered above the 200-day MA, Bitcoin has registered an average six-monthly gain of 197 percent.
According to the attached chart, Lee’s statement mirrors past market performance as Bitcoin recorded a 189 percent hike back in April 2019 when it broke above the 200-moving average. The price moved from $4800 to $13880 in a span of 84 days following the last breach above this key indicator.