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 Production Consumes More Energy Than Switzerland

Neil Dennis

Boffins at Cambridge University have published research that estimates Bitcoin consumes more energy than the whole nation of Switzerland. 

The Cambridge Bitcoin Electricity Consumption Index, produced by the university's Centre for Alternative Finance, the new tool provides a real-time estimate of the total electricy load and consumption of the Bitcoin network.

Methodology

Given the estimated nature of the data - based on all types of Bitcoin mining hardware - the index provides a range of possibilities:

  • Lower bound - assuming a "best case scenario" where every miner uses the most energy-efficient equipment and maximises expected profits
  • Upper bound - assuming a "worst case scenario" were all miners use the least efficient devices available and operate at massive losses
  • Best guess estimate - attempting to place an educated guess somewhere between the upper and lower bound that "more accurately quantifies Bitcoin’s real electricity usage"

Comparisons

On to the most fun part of the research, then. Using terawatt-hours (TWh) as the standard unit to measure electricity consumption, the researchers put their findings into perspective by comparing them with other users of electricity.

Here are some striking numbers:

  • If Bitcoin were a country, it would be ranked number 42 in the world by annual electricity consumption
  • It ranks higher than Switzerland (44), Greece (46) Hong Kong (55), New Zealand (56) and Denmark at (60)
  • Bitcoin's total annual consumption (best guess) is 64.15 TWh. Top consumer China's annual usage is 5,564TWh; at number two, the USA's is 3,902TWh
  • Of total global renewable energy production: hydroelectricity could power the entire Bitcoin network 77 times; biofuels and waste 11 times and solar and wind 26 times

Fun Fact

While Bitcoin miners run power-hungry gear, requiring cooling devices that can also pump up the energy costs, they are - for profitability's sake - at least trying to be as energy-efficient as possible.

In the Cambridge research, the final comparison looks at the inefficient use of energy and estimates that the amount of electricity consumed every year by "always-on but inactive home devices in the USA" could power the Bitcoin network for four years.

There's food for thought next time you go bed leaving the television set and computer on standby.