Bitcoin Bull Tom Lee Sticking to his $25k Prediction

Avi Rosten
  • The well-known bitcoin bull is still standing by his predictions for BTC, seeing the coin hit $25k in 2018
  • Identifying several factors that will push the price up - Lee sees increasing institutional investmtent as crucial

Tom Lee, Co-founder and Managing Partner of Fundstrat Global Advisors is doubling down on his bullish bitcoin predictions for 2018 despite the recent slump.

In an email to CNBC, the well-known bitcoin bull said that despite the cryptocurrency recently losing nearly all of the gains it has made since mid-April, he still sees the coin hitting his previously predicted high of $25,000 for 2018.

BTC today dropped below the $8,000 mark for the first time in over a month and is trading at the time of writing at $7529 according to CryptoCompare - a 41% drop for the year.

Lee however, attributes this latest drop purely to “typical crypto volatility” and identified several factors that he sees pushing the coin up to new highs in 2018.

The biggest factor in his opinion is the increasing involvement of institutional investors in the crypto space.

Talking to CNBC’s “Futures Now” yesterday, Lee commented:

"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."

Tom Lee

Moreover, historical data from Fundstrat he says corroborate his optimistic outlook:

"Historically, 10 days comprise all the performance in any single year of bitcoin's price," he said. "If you just took out those 10 days, bitcoin's down 25 percent a year. 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."

Tom Lee

While Lee’s latest remarks were confidently bullish, the influential figure made a notable error of judgement recently when he incorrectly predicted a 70% surge for bitcoin around the Consensus Conference of last week - a mistake he later attributed to a greater need for regulatory clarity.

New Cryptocurrency-based ETF Filed with US SEC

The US Securities and Exchange Commission (SEC) has received another application for a cryptocurrency-based exchange-traded-fund (ETF). Submitted on May 9, 2019, the latest crypto ETF application was prepared by Crescent Crypto Index Services LLC, a subsidiary of Crescent Crypto Asset Management LLC.

Crescent Crypto Index Fund (“XBET”)

According to Crescent Crypto’s prospectus, the ETF will “track the performance of a market capitalization weighted portfolio of bitcoin (BTC) and ether (ETH).” Referred to as the USCF Crescent Crypto Index Fund (“XBET”), the ETF is supported by the US Commodity Funds LLC (USCF), which will reportedly invest XBET’s assets in both BTC and ETH (held in the investment portfolio).

According to the ETF application: “XBET is an exchange traded fund. This means that most investors who decide to buy or sell shares of XBET place their trade orders through their brokers and may incur customary brokerage commissions and charges.”

As noted in Crescent Crypto’s prospectus, shares of XBET are “expected to trade” on the New York Stock Exchange (NYSE) Arca under ticker symbol “XBET.” In a manner that is similar to how traditional ETFs are traded, the crypto-based ETF, if approved, will “be bought and sold throughout the trading day at bid and ask prices like other publicly traded securities.”

Founded in 2005 and headquartered in Oakland, California, the United States Commodity Funds LLC is “an issuer of exchange traded commodity products (ETPs).” Notably, the first fund it launched (in 2006) was United States Oil Fund, LP, which is reportedly “the first commodity ETF based on crude oil launched in the United States.”

Bitwise Asset Management, VanEck/SolidX ETFs Applications To Be Reviewed This Month

USCF is currently regulated by the US Commodity Futures Trading Commission (CFTC) and the National Futures Association - under the Commodity Exchange Act (CEA).

Currently, there are several ETFs that have been filed with the SEC, including one submitted by Bitwise Asset Management with NYSE Arca and one by VanEck/SolidX, which was filed through a partnership with Chicago Board of Options Exchange (Cboe).

In March 2019, the SEC postponed its decision on whether to approve ETF applications filed by both VanEck/SolidX and Bitwise Asset Management. The federal securities regulator is now expected to review both ETFs this month.

Cryptocurrency Volatility May Be Affected By ETF Decisions

To date, the SEC has not approved any cryptocurrency ETF applications, however several analysts have argued that one will be approved in the foreseeable future.

According to a recent report from SFOX, a “prime dealer of cryptoassets for sophisticated traders and institutional investors,” the volatility of cryptocurrencies may be affected by “Bitcoin exchange-traded-fund (ETF) decisions,” among other factors such as the expiration of crypto futures contracts, and the discussions during “major” crypto and blockchain conferences such as Consensus which is taking place mid-May