The bear market for smaller cryptocurrencies known as alt-coins is over, according to Fundstrat Global Advisors LLC. But don’t expect the rally to resume just yet.
While the bulk of the decline is over, a bull market for the coins, which include tokens such as Eos and Dash, isn’t necessarily underway, strategists including Thomas Lee, Robert Sluymer and Sam Doctor wrote in a note to investors Tuesday.
In prior cycles, alt-coins 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, according to Fundstrat.
“We believe the current purgatory period will last for 150-175 days, implying a bull market for alt-coins really starts mid-August to mid-September,” according to the report. “The reason for this longer duration is the current dark clouds overhanging crypto are really alt-coin specific.”
The cryptocurrency market has been under pressure this year as regulators globally have cracked down on digital assets trading and initial coin offerings, the fundraising mechanism where startups sell digital tokens. The Securities and Exchange Commission sent a number of subpoenas to ICO teams it suspects are breaking securities regulations.