First, a word of warning: I think the valuation is overly optimistic,
in the extreme, and I would take it with a grain of salt. May very well be a small analytics firm looking to grab some attention by making a splashy claim. That said, the report was published to the firm's paying clients, so their own credibility is on the line.
The company making the prediction is FundStrat, which describes itself as:
We are an independent research boutique, providing market strategy and sector research. Our differentiated approach is based on what we call fundamental strategy. That is, our research process combines both top-down strategy and bottoms-up fundamental views, to develop a roadmap of practical and useful investment insights for our clients.
According to FundStrat, Bitcoin is following Metcalfe’s Law, which essentially sketches out the value of a network based on how many users it has.
“If you modeled something as simple as square the number of users plus transaction value, it’s explained 94% of [Bitcoin’s price appreciation] this year,” Lee said.
Now, as for the future valuation, Tom Lee, Managing Partner of Fundstrat, put a $25,000 price target for Bitcoin by 2022 in a note to clients published earlier this year. However, and this is important,
this view is predicated on cryptocurrencies displacing gold in portfolios with Bitcoin serving a “digital store of value.”Presently, I don't see that happening. I think people using crypto as a long term store of value are taking on immense risk, and I don't see something as volatile as crypto displacing gold, which is historically a hedge against inflation and therefore done out of safety. Bitcoin is pure risk.
A $25,000 price is fun to think about, even though I don't believe it's in the cards.
Even if we don't reach that amount half of that would be fantastic and more than double of what it is now.
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