Bitcoin rebounded by almost 94 percent after bottoming out below $4,000 in mid-March. And the cryptocurrency could extend its upside momentum, according to a prominent investment management firm.
Coincident Capital said Tuesday that the bitcoin price could hit $8,000, taking cues from the recovery of global equities amidst an otherwise looming economic crisis. The Cayman Islands firm highlighted the growing correlation between bitcoin and traditional markets, noting that an impending recovery in stocks could help the cryptocurrency extend its uptrend.
“Bullish on Bitcoin,” tweeted Coincident Capital. “Equities pulled back today but give it time. If 6M unemployment didn’t bother equities and market is pricing a V shape recovery, at least short term. Bitcoin being correlated 60-80% these days will follow through and fill the 50% drawdown gap. IE 8k bitcoin.”
With the so-called “drawdown gap,” the firm was referring to the empty candles on the CME’s bitcoin futures charts. Analysts believe that the cryptocurrency’s spot rate always returns to fill the gaps like the one shown in the chart below via a red bar. Therefore, a jump in equities would lead bitcoin to at least test $8,000, the lowest level in the gap.