The bear market for smaller cryptocurrencies known as altcoins is over, but the rally is not expected to resume just yet, according to a group of analysts at Fundstrat, the Wall Street research firm led by noted Bitcoin bull Tom Lee, Bloomberg reported.
Altcoins go through “purgatories,” or periods of consolidation, that last 70 to 231 days, the report said. Until then, investors should stay in larger cryptocurrencies, like Bitcoin (TIKER: BTC.EXANTE), according to Fundstrat.
“We believe the current purgatory period will last for 150-175 days, implying a bull market for altcoins really starts mid-August to mid-September,” the firm said.
“The reason for this longer duration is the current dark clouds overhanging crypto are really altcoin specific,” the report reads.
The firm’s measure of altcoins shows a 75 percent decline in the group over the past 64 days. The rout comes after a 62-day rally pushed them to unprecedented heights.
Based on the trajectories of three previous altcoin bear markets, where the selloffs lasted roughly as long as the surges that preceded them, Fundstrat says the likelihood that the current drop has ended is high.
Tom Lee earlier predicted Bitcoin to reach $20,00 by mid-year, and hit $25,000 by the end of 2018.