Nick Colas, co-founder of DataTrek and Wall Street’s first brokerage analyst to cover Bitcoin comprehensively, urged investors to take caution and think twice before entering the cryptocurrency market despite a recent rally in the market. Colas’ reputation is well-established among Wall Street professionals for having written Convergex’s Market Meeting Briefings for the past 14 years.
Colas cited lackluster fundamentals regarding what he refers to as the “FANG stock of the crypto world.” FANG stands for Facebook, Amazon, Netflix, and Google, the companies with the most widely held stocks.
He disproved the idea that because of the market’s crash early in the year, it is a perfect opportunity for investors to get in. To this, Colas said, “now is not the right time to buy.”
He mentioned two main reasons for his statement. The first reason is that there is no sign of incremental engagement from people who intend to purchase Bitcoin for the first time. “Like any new technology, you need new adopters to come and make it more valuable,” he added.
Another reason is with regards Google searches and decreasing Blockchain wallet growth. He said that Bitcoin is “way down from the peaks it had in December and January by 85 to 90 percent.” Based on this data, he believes that fewer people are interested in buying bitcoin for the first time.
Colas also noted the recent wallet growth, saying that it only reached 2.2 percent the past month. The number is a significant margin from last year’s recorded wallet growth of 5 to 7 percent monthly. “Even if the price of Bitcoin has gone up a little compared to what it was in February and March, it is still way below its December peak.”
The value of Bitcoin reached a high of $9700, then plummeted to around $6400 in the past month. Last December, it hit a record value of $20,000.
Having covered Bitcoin since 2013, he says he believes in the structure of the technology and the story, but it has vast price volatility around it. Last year’s surge proved Bitcoin to be a “bubble,” he added.