Fundstrat’s Lee Bullish on ETH, Expects a “Trend Reversal”
Ethereum is not down for the count, not if you ask Fundstrat Co-Founder Tom Lee. In a letter to clients cited on CNBC, Lee identified some historical trading patterns in the No. 2 cryptocurrency, whose value has been slashed by 83% since its peak. He pointed to trends suggesting that Ethereum’s setback is more like a setup for a rally. ETH has gained nearly 6% today on trading volume of $2 billion, which isn’t too shabby and reflects the price moving through some key resistance.
Ready to Rally
Lee is known for bullish predictions but they usually involve bitcoin, which he has forecast will revisit the $20,000 range by year-end. And despite the fact that bitcoin’s performance hasn’t played out exactly as he imagined, his outlook for Ethereum is equally specific. He’s calling for the ETH price to rally to $1,900 by year-end, which would surpass it’s high achieved in early January of approximately $1,400. The ETH price is currently trading at $228 amid what Lee described as “overly negative” sentiment. According to Lee:
“We believe Ethereum is about to stage a trend reversal and rally strongly.”
To see where ETH is headed, it’s important to look at where it’s been. Not only has it been a rocky 2018 but the last several months have seen the coin shed half of its value while its peers have been holding their own, which has added insult to injury for such a high-profile project. But as Fundstrat’s Lee points out, it’s not the first time that ETH has fallen behind the pack. He points to a handful of instances in which ETH has severely trailed other altcoins “by two standard deviations”, each time of which has been followed up by a “major trend reversal.”
For now, ETH remains in oversold territory. And if you ask Lee, it’s largely a result of “panic selling” among ICO startups. Lee called out this year’s blockbuster ICO EOS, which is the coin of the Block.one project. EOS migrated from Ethereum to its own mainnet, liquidating its ETH treasury in the process.
And there are other hurdles surrounding the “roadmap” with scalability in focus and not all developers always on the same page. Lee also described a “challenging technical picture.” Indeed, Fundstrat’s Robert Sluymer says ETH is stuck in a “pronounced downtrend.” But these headwinds are seemingly not enough to stop the bull run that lies ahead.
Lee isn’t alone in his bullish call, with Wall Street veteran Michael Novogratz similarly believing the worst is over for crypto prices and bitcoin will rally in the coming months.
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