Tom Lee on Bitcoin drop: "Step back and focus on the bigger picture"

11 Jul, 2019 | Updated: 11 Jul, 2019
by Will Heasman
Tom Lee on Bitcoin drop: Step back and focus on the bigger picture

While Bitcoin starts to recover from its sharp fall below $12k, analysts are still putting together the pieces in a frantic attempt to ascertain what Bitcoin is likely to do next. Meanwhile, Fundstrat’s Tom lee offers a more macro view, advocating a step back in order to look at the bigger picture.

This kind of advice is all to often forgotten in such a fast-paced market, we’ve gone from $8000 to just below $12,000, within the space of a month; this year alone Bitcoin has gained around 200%, and yet we can’t help but fear the worst when Bitcoin “dumps” to $11.5k, despite the fact that this is still a much higher level than the previous week.

Luckily there’s always someone to remind us to zoom out, this time the sage advice came from Lee, who advocated a look at longer time frames, while giving some insight on what might have caused the recent drop:

A Libra link?

As shown, Lee blames the drop on Federal Reserve Chairman Jerome Powell and his comments on Facebook’s divisive cryptocurrency, Libra.

During a press conference, Powell noted that there would be “high expectations," around Libra which would include safety, privacy and regulation, adding that the proposed digital currency raises "many serious concerns," including risks to the financial stability of economy due to Facebook’s large user base.

Powell also noted the future role of cryptocurrencies, suggesting that they wouldn’t yet be able to replace fiat currency:

"On your specific question, of digital currencies replacing central bank currencies, I think we're a long way from that... Digital currencies are in their infancy."

However, regardless of the causes of the dip, as Lee notes, the drop barely registered on the weekly chart, and for now (fingers crossed) it looks as though BTC is slowly recovering.

What do you think about this latest Bitcoin drop? Let us know your thoughts in the comments!

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