While some are calling for the final demise of Bitcoin, with the currency exhibiting price movement that would indicate the bubble has popped, long-time cryptocurrency bull Tom Lee claims that an irrational market is to blame for the falling price of BTC.
Compared to previous predictions, which have the currency falling to $2500 with little support to turn around the losses of November, head of research at Fundstrat Global Advisors Tom Lee finds the value of Bitcoin significantly lower than what it should be. In a note to investors published on Thursday, the advisor gave some surprising and hopeful news for those who left confused over the precipitous drop in BTC pricing throughout November–a month which culminated in the worst losses for Bitcoin since August 2011.
Lee, who has been a long time cryptocurrency advocate and Bitcoin bull, claims that the fair value for the number one cryptocurrency by market capitalization should be between $13,800 and $14,800. As apart of his analysis, he cites the large number of active wallet addresses, how often BTC is used by accounts and the deflationary supply of the currency all pointing to a much higher valuation than the current price of $3400.
While some continue to chide Lee for his predictions, particularly following his oft-remarked, bullish claim in May that Bitcoin would climb to $25,000 by the end of 2018–putting the price of the currency above its most recent all time high–he remains confident in the outlook for the industry and his own valuation.
As opposed to a flaw in his analysis for the worth of Bitcoin, Lee blames an irrational market for creating the current state of cryptocurrency valuation, with other indicators such as adoption pointing to a higher value,
“Fair value is significantly higher than the current price of Bitcoin,” he wrote. “In fact, working backwards, to solve for the current price of Bitcoin, this implies crypto wallets should fall to 17 million from 50 million currently.”
Lee cites a similar argument made by analysts and supporters of cryptocurrency, that while market prices are falling the adoption and influence of the industry is expanding. Mike Novogratz, another Bitcoin bull and CEO of Galaxy Digital Holdings which is heavily invested in cryptocurrency, described a similar sentiment in a conference call to investors reported on by EWN at the beginning of the month.
While Novogratz remarked that it had been a horrible year for token prices, including losses for Galaxy Digital which have exceeded $130 million in 2018, he stuck by a strong outlook for the industry in 2019 and beyond,
“I fundamentally think you’re going to see big adaption in 2019, 2020. Lots of the items in the digital world, the e-gaming space, are low value items so I think people will be more comfortable participating in blockchain. We’re making big investments in that area.”
With the potential for Bitcoin growth and cryptocurrency adoption still climbing in spite of falling prices, both Lee and Novogratz are hinting at a market turn that could happen unexpectedly. Similar to the crash in internet stocks that occurred prior to wide-scale dissemination for both Wall Street and Main Street, cryptocurrency could be in the latency phase as investors and users wait for improved development.