Tom Lee, the co-founder of Fundstrat Global, has again backed down its earlier price prediction for bitcoin. He thinks that the drop in the stock market is related directly with bitcoin’s price low. The key for this forecast to hold is the entrance of institutional money into the cryptocurrency market. This will increase the demand of assets and ultimately drive the price up.
Tom Lee Does it Again
Tom Lee has declared that he still thinks that bitcoin will reach $15K at year’s end. This despite the impressive drop that the cryptocurrency market has faced these days. To him, one of the most important things that are dragging the price down is the tech stock bear market. Tech is intricately related to cryptocurrencies because people that invest in tech stocks are also likely to invest in cryptocurrencies.
So these investors might be getting out of their positions out of fear, a thing that is affecting both markets in the same way. Also, the precarious state of the bitcoin price is also the product of the bitcoin cash hard fork that managed to get a lot of money out of the cryptocurrency system due to fears.
However, Tom Lee thinks that the next wave of adoption is institutional and these institutions will be attracted to the market by new startups.
Institutional Money To Save Bitcoin
Tom Lee thinks that the demand for bitcoin will ramp up with institutions getting into the business. The entrance door for institutions will be services like Bakkt, that will offer a physically backed futures market settled daily. But even he recognizes that regulation must also accompany this process.
With clear regulations, institutions will be more comfortable opening positions in cryptocurrencies. Tom Lee thinks that institutions like the SEC are already taking steps in the right way. He stated that:
“The first step would be for regulators to sanction non-compliant exchanges and institutions, and i think that is taking place”
Bitcoin Is The Future
To him, bitcoin and cryptocurrencies are still in the nascent stages compared with other payment industries like Visa or Paypal. However, bitcoin has already surpassed PayPal in the total amount of money moved. He also recognized that maintaining the bitcoin network is getting increasingly expensive each year.
Despite this, he believes that if bitcoin is classified as a commodity, its fair value should be around the break-even price that is near the $7K currently.