Thomas Lee, the co-founder of Fundstrat, posted today on Twitter how they believe the price of Bitcoin could reach $36,000.00 USD by the end of 2019.
Fundstrat is an investment research firm that advises investors about market opportunities, letting them know which assets will have better performance. All of this based heavily on data analysis studies with a quantitative approach. Lately they have been actively monitoring the Cryptocurrency market, allocating resources towards trying to explain and predict pricing evolution.
Their conclusion comes after a paper published by Sam Doctor, Fundstrat’s head of research, found a relation between mining break-even prices and the minimum support price that Bitcoin has experienced. He uses this assumption to make a relationship between the two allowing him calculate that price. He states that as prices go down, miners; the natural bitcoin sellers, reduce their offer into the market waiting for a better price to happen. The price stabilization is achieved by the reduction of bitcoin availability.
Bitcoin Mining is the truly the underlying power that allows bitcoin, and many other cryptocurrencies to function in the way they do. ‘Miners’ use specialized (or in some cases even normal) computer systems to solve complex cryptographic problems allowing for bitcoin transactions to go through, and as a reward for their efforts, they are awarded a small amount of bitcoin for every transaction they produce.
Sam Doctor thinks that with the growth of the hash power, (the number of miners operating in the network) the number of bitcoin hoarded will be significantly higher, and the support prices will hold up much higher.
Some have criticized this theory by saying that the causation between the two events is too weak, and that hash power growth follows price growth, not the other way around. This is because miners await high bitcoin prices to buy more mining hardware. That is the case of Ari Paul, CIO of Blocktower Capital, another cryptocurrency investment firm, who stated his posture about it on a tweet thread can be found here.
This prediction goes along with the former positive prediction of Thomas Lee, that believes that at the end of this year, bitcoin price will be of $25,000. Also, he predicted that this week, prices will rise due to the Consensus 2018 Convention, the main forum for all things bitcoin, happening in New York.