Fundstrat says bitcoin is headed to $100,000 by year-end as a trading rule kicks in

Published Mon, Aug 9 20213:07 PM EDTUpdated Tue, Aug 10 20214:28 AM EDT

Bitcoin's price broke $46,000 on Monday – its highest level since the middle of May – and Fundstrat Global Advisors believes the digital coin could soar to $100,000 by year-end. Bitcoin has surpassed its 200-day moving average, and Fundstrat says now is the time to buy, according to an investor note Monday. That's a rule of bitcoin trading, according to the firm: buy above its 200-day moving average, and it's a "biggie," the firm's Tom Lee said in the note. The cryptocurrency's forward performance is stronger when it's trading above its 200-day moving average, he said, noting a six-month forward return of more than 193% when trading above it, versus more than 10% when trading below that level. Lee, a longtime bitcoin bull, said it's not clear why the price is climbing. He added it's significant that the virtual currency continues to climb despite facing "legislative and regulatory assault" from China, which banned cryptocurrency mining operations in June, and the U.S. — which is nearly through a prolonged debate in Congress over the handling of crypto taxes outlined in the proposed infrastructure bill. "And yet, bitcoin is rallying," Lee said. "This is key insight." The play is "simple," according to Fundstrat's investor note: go long on bitcoin or buy crypto equities. "Digital assets should rally broadly," he said Beyond bitcoin and ether, investors can also buy exchange-traded notes through Bitwise and Grayscale, Lee noted. Among crypto equities, he highlighted that exchanges Coinbase and Voyager, as well as mining company Riot Blockchain , have an estimated two to three times beta to bitcoin. That means these shares are volatile versus the digital asset, but have high return prospects. Lee also highlighted crypto-friendly bank Silvergate , noting it has five to 10 times estimated beta to bitcoin. Shares of crypto exchanges are closely tied to the price of bitcoin because so much of the companies' revenue is derived from trading fees. However, many are working on diversifying their revenue streams. That includes Coinbase, which is due to report its quarterly earnings Tuesday. While trading volume has been lower over the past quarter, analysts are still optimistic about Coinbase's second-quarter performance, expecting growth in its retail user base that would signal broader adoption for Coinbase and the crypto market at large.

In this photo illustration a Bitcoin logo seen displayed on a smartphone with stock market percentages in the background.

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Bitcoin's price broke $46,000 on Monday – its highest level since the middle of May – and Fundstrat Global Advisors believes the digital coin could soar to $100,000 by year-end.