HODL: Tom Lee Reaffirms BTC's Full-Year Gains Are Generated in Only 10 Days

Francisco Memoria

Tom Lee, the head of research at Fundstrat Global Advisors and a well-known bitcoin bull, has recently reaffirmed that his research has shown bitcoins’s full-year returns are generated in only 10 days, hinting that HODLing makes sense.

On social media, Lee referenced this week’s crypto market rally, Lee noted that it can serve as a reminder that bitcoin, the flagship cryptocurrency, has historically generated its annual gains in 10 days.

Lee’s research was initially revealed last year, and it showed that, since 2013, the flagship cryptocurrency needed only 10 days or less to see its full-year returns. At the time, Lee used 2017 as an example, noting then “a total of 12 days” represented the cryptocurrency’s full-year return.

According to the Wall Street analyst, if an investor didn’t hold on to stocks through the 10 best days for the S&P 500 each year, his annualized return would drop from 9.2% to 5.4%. Comparatively, if an investor doesn’t hold BTC for its top 10 days, his annualized return would drop to -25%.

Lee’s recent tweet came as a reminder the HODLing makes sense for those investing in BTC. In the last few days the flagship cryptocurrency has been seeing its price rise significantly, so much so it’s up 41.3% in the last 30 days, according to CryptoCompare data.

What’s behind BTC’s price surge is unclear, although some analysts believe various factors could be involved. The cryptocurrency last month saw a ‘golden cross’, and Fidelity Investments is reportedly going to “buy and sell” the crypto for institutional clients in the next few weeks, showing technicals are improving, as well as adoption.

Tom Lee is a notable bitcoin bull as he’s made various bullish predictions regarding the cryptocurrency’s future price. Last year, he predicted it would hit $25,000 by the end of 2018, and that it would hit $91,000 by March of 2020.

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

Featured Image Credit: Photo via Pixabay.com