Tom Lee, the head of Fundstrat Global Advisors and a well-known bitcoin bull, has recently claimed the market is wrong about the flagship cryptocurrency as it’s ‘fair value’ is well above its current market price.
According to Bloomberg, Lee argued BTC’s fair value, given the number of active wallet addresses, usage per account, and other factors influencing its supply, is “between $13,800 and $14,800.”
Per the popular Wall Street analyst, the divergence in the cryptocurrency’s fair value and its current market price can be explained by last year’s meteoric rally from about $1,000 to a near $20,000 all-time high, a “meltdown” in the macroeconomic climate, and ICO projects selling most of their funds.
Lee was quoted as saying:
Fair value is significantly higher than the current price of Bitcoin. In fact, working backwards, to solve for the current price of Bitcoin, this implies crypto wallets should fall to 17 million from 50 million currently
Bloomberg added that if bitcoin wallets reach 7% of Visa’s 4.5 billion accounts, then its fair value will be of $150,000, according to Tom Lee’s model. Lee, as CryptoGlobe covered, maintained a $25,000 by the end of the year bitcoin price prediction throughout 2018.
Back in July he revealed he was bullish as BTC has historically traded at 2.5x its mining difficulty. Last month, he cut his year-end price prediction to $15,000, as he pointed out Fundstrat’s data science team found that, using Bitmain’s S9 ASIC machine, bitcoin’s “break-even” point is of $7,000.
Taking that figure, he calculated bitcoin’s “fair value” was of roughly 2.2 times that point, leading him to the $15,000 mark. In a note sent to clients, he noted that between 2013 and 2015 BTC “never sustained a move below breakeven.” Speaking to Bloomberg, however, he revealed he’s “tired” of people asking him about target prices.
Notably, Lee has earlier this year used historical evidence to claim hodling making sense, as per his research it takes bitcoin only nine days to see a full year’s gains. Those who didn’t hold onto BTC during its top 10 days from 2013 to 2017, he claimed, lost 25% a year.