Bitcoin’s Plunge Has Not Shaken Tom Lee
Bitcoin’s latest technical breakdown hasn’t affected Tom Lee’s bullish outlook on the digital currency. The head of research at Fundstrat Global Advisors is standing by his target of $25,000 by year’s end.
In an email conversation with CNBC, Lee said the latest drop in market prices can be attributed to “typical market volatility” rather than any new underlying risks facing digital assets. He also identified three factors that will lead bitcoin to $25,000.
The first factor is cost of production, which Lee identified as anywhere between $6,000 and $8,000 during the most recent slide. This means bitcoin is still worth more than its cost of production.
Growing interest from institutional traders will also keep the market rallying for the foreseeable future. Banks and other financial institutions are still feeling their way into the crypto market and are looking for regulatory guidance on how to move forward.
In a Tuesday interview with CNBC’s “Futures Now,” Lee issued the following statement:
“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because there is still some regulatory uncertainty. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why bitcoin rallies.”
Lee also reminded investors just how quickly the crypto market can change. A historical analysis reveals that the entirety of bitcoin’s gains in any given year can be attributed to ten days. Without those days, bitcoin values are down 25% annually.
“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days,” he said.
BTC/USD Price Levels
Bitcoin prices bottomed at $7,289.35 on Thursday, their lowest in about six weeks. The cryptocurrency has declined nearly 10% over the past week.
At last check, BTC/USD had recovered around $7,508 for a total market cap of $128.3 billion. Selling pressure brought more volume to the market, with total turnover in bitcoin approaching $7 billion.
With the latest skid, bitcoin is down more than 40% this year.
The market cap for all cryptocurrencies bottomed at $318.8 billion on Thursday but has since recovered to around $333 billion. The market is down nearly $60 billion from its Sunday high.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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