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.

Mining Oligopoly: Six Pools Control 75% of Bitcoin's Hashrate, Data Shows

Data analyzed by leading fintech media company ChainDD has recently found that six mining pools currently control nearly 75% of the Bitcoin network’s hashrate, and five of them are located in China. Notably, three are associated with crypto mining hardware manufacturer Bitmain.

According to ChainDD’s 2018-2019 Cryptocurrency Market Annual Report, created by its DD Think Tank, 80% of Chinese bitcoin miners are located in Sichuan, and although most cryptocurrency miners are currently located in the country, some are moving overseas “due to restrictions.”

China offers crypto miners cheap energy sources, thanks to various natural resources it takes advantage of. Its government, however, has cracked down on cryptocurrencies in the past, although recently a court ruled Bitcoin should be protected as property by law.

The report further found that large mining companies are more prone to hold onto their mining machines during bearish market turns, as the amount they’ve invested in their operation justifies it. This, it claims, gives them a competitive advantage later on, as they mine at a loss coins that gains value in the long run. It adds:

Additionally, large mining companies are more resilient against risks of BTC price drop, thanks to their advantages in electricity and low price mining equipment.

ChainDD’s DD Think Tank noted that as of January 21, six mining pools – BTC.com, Antpool, SlushPool, ViaBTC, and F2Pool, had 74.48% of the BTC network’s hashrate. These pools, with the exception of SlushPool, are based in China.

Out of these three are related to Bitmain “directly or indirectly.” These are BTC.com, which had over 21% of the network’s hashrate, Antpool (13.9%), and ViaBTC (10.51%), which received investments from the firm.

Bitmain, as CryptoGlobe covered, was eyeing an $18 billion initial public offering (IPO) last year, potentially the largest in history. Since then, it has been revealed the Hong Kong Stock Exchange (HKEX) is “hesitant” to approve its IPO.

Daily BTC Production Dropped

The report further found that the rate of new Bitcoin’s coming into the market decreased last year. It was at an annual high in January of 2018, as 2,038.31 coins entered the market a day, while in November the number dropped to 483.

Notably, Bitcoin’s mining difficulty increased 173.2% throughout the year. November’s dip in the amount of coins coming into the market is associated with Bitcoin Cash’s (BCH) hard fork that created Bitcoin Satoshi’s Vision (BSV).

Amount of BTC produce per month last year

This, as at the time BTC’s hashrate dropped significantly, presumably as both sides of the fork battled to try and control hashrate. While BSV threatened to mine empty blocks on BCH, the BCH side attempted to stop that from happening, leading to what became known as a hash war.

It’s known that Bitcoin.com’s mining pool, at least, diverted its BTC hashrate to BCH to contribute. Reports suggested before the fork Bitmain deployed 90,000 Antminer S9 ASICs to prepare.