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.

Bitcoin ETF Decisions Likely to Affect Cryptoasset Prices this Month: Report

SFOX, a “prime dealer of cryptoassets for sophisticated traders and institutional investors,” has published its crypto volatility report for April 2019.

Established in 2014, SFOX, a Los Angeles, California-based fintech firm, revealed in its monthly market report that its proprietary Multi-Factor Market Index “remains at mildly bullish entering May 2019.”

As noted in SFOX’s blog post, the firm’s Multi-Factor Market Index is “calculated using a proprietary formula that combines quantified data on search traffic, blockchain transactions, and moving averages.”

Volatility of Cryptocurrencies May Be Affected By “Bitcoin ETF Decisions”

SFOX’s report mentioned that Ether (ETH), Bitcoin Cash (BCH), and Litecoin’s (LTC) “movements were highly correlated” with Bitcoin (BTC). The monthly report from the digital assets dealer revealed that the month of April “highlighted the sustained influence of BTC and individual exchanges on cryptoasset performance.”

According to SFOX’s management, the volatility of cryptocurrencies may be affected by “Bitcoin exchange-traded-fund (ETF) decisions,” expiration of crypto futures contracts, and the discussions during “major” crypto and blockchain conferences such as Consensus which is taking place mid-May.

Key Observations: Bitcoin Price Movements In April 2019

Some of the key observations made by SFOX’s researchers regarding the BTC price are as follows:

  • “Between April 1st and April 3rd, the price of BTC increased over 20%, from $4122.92 to $5017.13. To the extent that this price surge has an explanation, the prevailing notion is that a 20,000 BTC buy order by an anonymous party on April 2nd threw supply and demand out of equilibrium.”
  • The rally in early April caused many large leveraged Bitcoin positions to be liquidated on Bitcoin Mercantile Exchange (BitMEX), a leading Seychelles-registered and Hong Kong-operated crypto derivatives exchange, which may have exacerbated the volatility.
  • “[The present] rally [has been] highly publicized in the media, which could have theoretically caused people to experience some FOMO (fear of missing out), which drove it even higher — similar to what we observed in late 2017, albeit on a smaller scale.”

Key Observations: Ethereum Classic Price Movements In April 2019

A few notable observations regarding Ethereum Classic (ETC) price by SFOX’s research team are as follows:

  • “On April 7th, the price of ETC climbed over 50%, from $5.84 to $8.91. Whether or not this short-lived spike was motivated by changes in ETC’s fundamentals is unclear.”
  • The spike in ETC price “came two days after a public conference call in which the ETC ecosystem discussed its upcoming Atlantis hard fork; while this hard fork isn’t expected until mid-September 2019, its proposed changes are expected to make ETC less manipulable as a network and more (decentralized application) DApp-friendly.”
  • “The data suggest that [the ETC] price spike mostly came from a single source: reportedly, Coinbase Pro facilitated over 37% of ETC trading volume during this time, and ETC’s price on Coinbase Pro reached as high as $14 at peak — well above the marketwide volume-weighted average price.”

Some important events, or developments, to look out for during May 2019, according to SFOX, are as follows:

  • “The US Securities and Exchange Commission (SEC) is set to approve or deny two current Bitcoin ETF proposals in the month of May. Historically, the market has been fairly reactive to news about Bitcoin ETF proposals — therefore, the outcomes here could potentially impact crypto volatility.”
  • “Crypto volatility typically moves around the time of futures expirations. With Cboe having backed off from BTC futures for the time being, the date of CME’s futures expiration may potentially impact volatility more than usual.”