Fundstrat’s Thomas Lee on Bitcoin (BTC), EOS, Stellar Lumen (XLM), Dogecoin (DOGE), and XRP

Siamak Masnavi

Thomas Lee, a Managing Partner and the Head of Research at Fundstrat Global Advisors, recently had an interview with crypto influencer Heidi Chakos, the owner of the popular YouTube Channel "Crypto Tips", during which he presented his latest thoughts on Bitcoin (BTC) and altcoins (in particular, Stellar Lumen, EOS, and Dogecoin). 

Here, we look at some of the key highlights from this interview.

Interesting Correlations Within the Crypto Markets

"Yeah, there are some things that surprise us.In general, doing research for 25 years, I've learned that the crowd is mostly right. So, I do think, for the most part, what people believe is generally usually going to be correct... But there are a lot of times when divergences or extremes are where interesting correlations can be found...

For instance, Bitcoin mining break-evens... the way we define it in our data science team is the cost of mining plus the cost of electricity plus the transmission cost of electricity plus the overhead, and that gets to around $6,000 Bitcoin right now... I don't think it's a coincidence that Bitcoin is holding $6,000. I think it actually acts like mining [cost] is the floor for Bitcoin. In 2014, just to give you perspective, $180 was the break-even cost for Bitcoin... and in 2013-2015... Bitcoin bottomed around $180...

Miners are in the business of Bitcoin mining because they actually believe in the project. So, what they know is that at $6,000, they are pretty much only going to sell the bitcoins they need to pay their staff, but they are actually more likely to want to retain it, especially because they know Bitcoin can violently move upwards... So, I think miners here are trying not to dump their bitcoin."  

What Lee Thinks About Metcalfe's Law Determing Bitcoin's Price

"The idea is that something like Bitcoin or Facebook or anything that relies on other users, if you keep doubling the number of users, the value of the community doesn't actually double, it grows up by an exponent factor. If you double the size of the community, you actually get a 4X increase in the utility of it...

So, to Nic's [i.e. Nic Carter, co-founder of Coinmetrics] point, wallets is the same metric. Bitcoin only has 50 million wallets... We've shown that one variable, [number of] wallets, close to 72% explains Bitcoin's price change since 2009."

The Correlation Between the Price of Bitcoin and Altcoins

"Correlations between cryptocurrencies is very high. So, like if Bitcoin is rising, everything goes up, and when Bitcoin falls, everything goes down. There is some differentiation, a little bit more than we realized. For instance, year to date, only three tokens have had an increase in daily active users, or what we call Daily Active Addresses, which is Stellar Lumen, EOS, and Dogecoin, and they are the three best performing tokens this year. 

So, there is a fundamental variable for some of these projects that have quite a lot of activity, but then some of the 1500 tokens on CoinMarketCap barely have any users. So, I think they are going to be trading relative to Bitcoin, because if they don't go down when Bitcoin goes down, it means that they are outperforming, and if they don't have an active community, they should be falling. So, I think... if you can find projects where the community is not only active but growing... those are going to be the best performing projects...

An example is DOGE... Another one that I think... deserves some credit is XRP because there is a very active community there."

Security Tokens

"We communicate with the traditional markets... the bulk of our clients are traditional investors. They have a lot of interest in security tokens, and maybe not because those things can go to the moon... security tokens can't really have the same upside as a Bitcoin, but it allows them to either invest in things that are traditional equities, [like] single buildings or intellectual property... It's probably going to be a big area. I don't have a strong view because I think there's still some uncertainty on the regulatory side of that."

Price Prediction for Bitcoin

"I think people are too bearish. What happens is that people get bearish because it makes sense... I mean, markets have been terrible, and we are below our 200-day [moving average], and we published a report this week showing that when Bitcoin is below its 200-day, it only goes up 50% of the time in the next six months, and when it is above its 200-day, it's up 80% of the time...

But Bitcoin's break-even by the end of this year is going to be close to $8,000 or $9,000, and historically, it's traded at 2.5 times that, and so that's how we get the $22,000 [price]...

We believe Bitcoin has bottomed because we think that $6,000 is the floor... The one thing that everyone's psychology going to do is immediately give a 100% probability to the negatives, and they give the lowest probabilities to the positives... 

I know a lot of people think that Bitcoin could collapse to $3,000... I think what's more probable is that we have a very explosive increase in price."

 

Featured Image Courtesy of Fundstrat Global Advisors

Binance ‘Unknowingly’ Earns $775K via Staking, Set to Launch Huge XLM Giveaway

On Thursday (July 18), Binance, the world's largest cryptoasset exchange (by adjusted trading volume), made a rather interesting announcement: it had "unknowingly" earned 9.5 million Stellar Lumen (XLM) tokens through staking rewards, and it is going to give all of it away to all Binance users who maintain XLM balances between July 20 and September 1.

Binance explained via a blog post that in August 2018 the Binance team followed the advice of the Stellar Development Foundation "to change some parameters on both cold and hot wallets," which resulted in the exchange "unknowingly" earning staking rewards for its XLM holdings since 31 August 2018.

Then, this week, while the Binance team was considering the idea of adding support for XLM staking, it found out that Binance had earned around 9.5 million XLM tokens (each of which was worth approximately $0.08157 at the time). Binance notes that all "weekly staking rewards between then and now are documented on the blockchain." 

So, the team made two decisions:

  • add support for XLM staking to Binance.com; and
  • give away the aforementioned staking rewards to the Binance community (i.e. Binance users).

This is not the first time that Binance has added staking support to Binance.com. The exchange already "distributes NeoGas for NEO holders, Ontology Gas for Ontology holders, VTHO for VeChain holders, and BitTorrent tokens for TRON tokens."

Here is how this 9.5 million XLM giveaway is going to happen.

From July 20, Binance will support XLM staking. Between this date and September 1, Binance will take "daily snapshots" of XLM balances in Binance user accounts.

Then, on September 1, Binance will "tally average user XLM balances based on these snapshots," and process the distribution of staking rewards to these user accounts (that maintained XLM balances during the staking period). Furthermore, the roughly 9.5 million XLM tokens that Binance has unknowingly earned to date will be distributed as a bonus payment to all Binance users who jave maintained non-zero XLM balances since July 20. 

Binance says in its blog post that it estimates this "one-time distribution of 9,500,000 XLM shared proportionately among Binance users" to be worth "10 to 12 months of typical monthly rewards."

According to a support article published on July 18, here are the details of Binance's "Monthly XLM Staking Airdrop Program":

  • Binance will start these daily XLM balance snapshots at 00:00 (UTC) on 20 July 2019.
  • This is how Binance will calculate the XLM staking distribution:

XLM generated by each user = Total XLM staking rewards received by Binance * User XLM holdings ratio. User XLM holdings ratio = User XLM holdings / Total XLM staked by Binance.

  •  In order to qualify for XLM staking rewards, Binance users must have a balance of at least 10 XLM.
  • This initial distribution of XLM staking rewards will be calculated until 1 September 2019, "with the total amount distributed equal to the staking rewards accrued on holdings during the 43 day period."
  • These XLM staking rewards are calculated on a daily basis and are distributed monthly. 
  • XLM distrubutions will be "completed before the 5th of each month."

In other Binance news, another support article explained that Binance's Margin Trading platform has added support for two margin assets (EOS and LINK), three borrowable assets (BNB, EOS, and LINK), and three margin pairs (EOS/USDT, EOS/BTC, LINK/USDT, LINKBTC).

Binance's announcement about its 9.5 million XLM giveaway may have helped the XLM price. According to CryptoCompare, XLM is currently trading at $0.08914, up 7.96% in the past 24-hour period:

XLM-USD 24-Hour Chart on 18 July 2019.png

Featured Image Courtesy of Binance