On January 9, 2018, Tom Lee spoke optimistically of Bitcoin in an interview with CNBC, expressing his opinion that the digital currency could “easily double” in value over the course of the year.
At the time of the interview, Bitcoin was down 25 percent since its highest point near $19,800 in December 2017. It has since dropped a further 25 percent, reaching a low under $10,000. The price of Bitcoin has since recovered reasonably and is trading at $11,680 at the time of writing.
Here’s what the expert investor and co-founder of Fundstrat Financial Advisors had to say:
“I still think it’s pretty early days for investors to really appreciate how much development and actual use cases are being built around Bitcoin and blockchain, so I think the volatility we’re seeing is really just a price discovery process.”- Tom Lee
Despite the sharp fluctuations and slightly higher price change with volatility, Lee expects the cryptocurrency to reach and potentially exceed $25,000 in 2018.
“We expect Bitcoin's major low to be $9,000, and we would be aggressive buyers around that level. We view this $9,000 as the biggest buying opportunity in 2018.”
Lee stated, with his affirmations certainly playing a role in the price increase that followed.
He continued with the following prediction:
“If it can rise close to 30 percent in the first half of this year, the second half of 2018 will see a move bigger than 30 percent. I think Bitcoin is still something you want to own through the middle of the year and through year-end.”
In many ways, the steep drop that has recently taken place has had a substantial psychological effect on many investors, as the $10,000 mark was a defining moment in the history of the digital currency. While it’s a common occurrence for inexperienced investors to sell at the worst possible time, those that view Bitcoin as more than a short-term investment have opted to ride out the dip.
“On a long-term basis, the easiest way to look at it is a replacement or store of value,” said Lee, firm in his belief that Bitcoin will remain a part of the financial market indefinitely. According to the finance expert, millennials will eventually come to use Bitcoin as a similar asset to gold.
Berentsen and Schär of the Federal Reserve Bank of St. Louis made the same statement in a recently-published cryptocurrency report.
“It is likely that crypto assets such as Bitcoin will emerge as their own asset class and thus have the potential to develop into an interesting investment and diversification instrument. Bitcoin itself could over time assume a similar role as gold.”- Berentsen and Schär
When asked his recommendation on trading stocks or cryptocurrency, Tom Lee was blunt in his advice.
“You want to make stocks your primary risky asset for most investors,” he said, “but even on a risk-adjusted basis, I think Bitcoin is going to easily outperform the S&P.”
Lee’s system for valuing Bitcoin is far from pure speculation. In addition to historical trends, the expert considers the growth of monetary supply, comparing that supply to the prevalence of gold and other alternative currencies, and further compares it to the proportion of those alternative currencies that is represented by Bitcoin.
Tom Lee is well-known and highly respected in the cryptocurrency industry, as he was the first market strategist from Wall Street to create a frequently-issued report containing expert predictions on the Bitcoin. Throughout its history he has remained bullish, becoming one of the leading figures representing the unchanged and long-term potential of Bitcoin and cryptocurrencies.
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