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Author Topic: [2017-07-07] Strategist Tom Lee weighs sees bitcoin going as high as $55,000  (Read 5684 times)
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July 07, 2017, 06:14:01 PM
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Top Wall Street strategist sees bitcoin 'cannibalizing' gold, worth as much as $55,000

-Bitcoin has more than doubled in value this year and last traded near $2,540.
-Widely-followed strategist Tom Lee said in a report that his model shows bitcoin could rise to a range of $20,000 to $55,000 in the next five years.
-The report is a first from a major Wall Street strategist on the digital currency.




Fundstrat's Tom Lee on Friday became the first major Wall Street strategist to formally lay out his views on bitcoin.

The digital currency could be worth as much as $55,000 by 2022, Lee said in a report titled "A framework for valuing bitcoin as a substitute for gold."

"We believe one of the drivers [of bitcoin] is crypto-currencies are cannibalizing demand for gold," Lee said in the report. "Based on this premise, we take a stab at establishing valuation framework for bitcoin. Based on our model, we estimate that bitcoin's value per unit could be $20,000 to $55,000 by 2022."

Bitcoin traded near $2,540 Friday. The digital currency has more than doubled in value for the year, and high interest prompted a Goldman Sachs technical analyst, a team of Morgan Stanley analysts and Citi researchers to issue reports on bitcoin or the blockchain technology behind it in the last few months.

However, Lee is the first widely-followed market strategist to issue a report dedicated to predicting bitcoin's price. Lee also happens to be the most bearish strategist on U.S. stocks currently. He was JPMorgan Chase's chief equity strategist from 2007 to 2014 before co-founding Fundstrat Global Advisors, where Lee is managing partner and head of research.

The strategist's case for bitcoin is a basic supply-and-demand story, similar to the argument other proponents of bitcoin use when playing up its future as "digital gold."

Gold's market value of $7.5 trillion is exponentially greater than bitcoin's $41 billion. But Lee pointed out the precious metal's supply "is surging as mining soars to all-time highs," while the number of available bitcoins is rapidly approaching its inherent 21 million-coin limit.

"A simulation shows that this will slow even further to less than 1.5% growth by ~2020, meaning bitcoin supply will grow even slower than gold," Lee said.

Bitcoin is also theoretically a better way to store value, proponents argue, since governments can easily decrease a currency's worth by printing more of it.

The constraints on bitcoin's supply and the potential worth of the digital currency mean there will be high demand for a limited product, driving up the price. Bitcoin has already surged from below $1,000 on Dec. 31 to briefly top $3,000 in June.

Lee also expects investors could look at bitcoin as a substitute for gold, and his model shows the digital currency could be valued at $20,300 by 2022. Adding more variables to the model puts the value of bitcoin in five years in a potential range of $12,000 to $55,000.

"In other words, substantial upside exists in owning cryptocurrencies here," Lee said.

He also expects central banks will consider buying the digital currencies if the total market value tops $500 billion. Including bitcoin and its rival ethereum, the value of all cryptocurrencies hovers around $100 billion, according to CoinMarketCap.

"In our view, this is a game changer, enhancing the legitimacy of the currency and likely accelerating the substitution for gold (by investors)," Lee said.

Lee noted a Bloomberg news report that central banks have looked into the possibility of owning digital currencies.

In March, Federal Reserve Governor Jerome Powell cautioned in a speech about the potential challenges for a central bank to issue a digital currency, including privacy.

To be sure, digital currencies such as bitcoin often swing wildly and operate in unregulated markets. While the lack of regulation is what has attracted many buyers, many consider bitcoin the "Wild West." Three years ago, Mt. Gox, the largest bitcoin exchange then, filed for bankruptcy and said it lost 750,000 of its users bitcoins and 100,000 of the exchange's own.

The future of bitcoin is also in question. This summer, the digital currency could split if developers don't agree on the same system to upgrade bitcoin.

Lee acknowledged bitcoin's volatility in his report, noting that annualized bitcoin volatility is 75 percent, "substantially higher than gold's 10%. But as noted, gold's volatility approached 90% from 1971 to 1980 as the U.S. abandoned the gold standard — hence, we expect this to improve over time."


http://www.cnbc.com/2017/07/07/strategist-tom-lee-weighs-sees-bitcoin-going-as-high-as-55000.html



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July 07, 2017, 06:24:36 PM
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We're getting spoiled with extremely bullish predictions recently. In all my time here, I have never experienced this much positivity. If that isn't enough, even the mainstream media sources are quite bullish on crypto, where not that long ago the only sort of news they were reporting about, were all related to criminal acts. I however don't understand why people keep throwing with such insanely high predictions, while we by far haven't even made an attempt to break through the $10,000 level. As long as that isn't the case, I'll remain holding my conservativeness.

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July 08, 2017, 09:59:33 AM
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We're getting spoiled with extremely bullish predictions recently. In all my time here, I have never experienced this much positivity. If that isn't enough, even the mainstream media sources are quite bullish on crypto, where not that long ago the only sort of news they were reporting about, were all related to criminal acts. I however don't understand why people keep throwing with such insanely high predictions, while we by far haven't even made an attempt to break through the $10,000 level. As long as that isn't the case, I'll remain holding my conservativeness.

I agree

I also do not understand why they are being so optimistic when we do not even arrive August to know what future awaits us

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July 08, 2017, 02:33:11 PM
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We're getting spoiled with extremely bullish predictions recently. In all my time here, I have never experienced this much positivity. If that isn't enough, even the mainstream media sources are quite bullish on crypto, where not that long ago the only sort of news they were reporting about, were all related to criminal acts. I however don't understand why people keep throwing with such insanely high predictions, while we by far haven't even made an attempt to break through the $10,000 level. As long as that isn't the case, I'll remain holding my conservativeness.

I wouldn't say that the mainstream media is bullish on Bitcoin. Every now and then, I am noticing articles which claim that the current price rise is a bubble. That said, I can notice some change happening. Earlier, 95% of the media articles were negative and just around 5% were positive. Now it is like 70% and 30%, respectively.

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