[2017-11-03] Bitcoin Bull Tom Lee Cautious as Bitcoin Price Nears $7,500

[cybersofts]

Wall Street strategist Tom Lee is urging investors to exercise caution following the bitcoin price’s staggering advance during the first week of November.

The bitcoin price has risen to dizzying heights this week, and that advance continued on Friday as bitcoin began to test the $7,500 mark for the first time in its history. At present levels, bitcoin is up 25% for the week, nearly 75% for the month, and more than 700% for the year.



BTC Price Chart | Source: BitcoinWisdom

As Bloomberg reports, Wall Street strategist Tom Lee is concerned that bitcoin be setting itself up for a correction. Lee, the head of research at Fundstrat Global Advisors, urges investors to exercise caution, even in the wake of optimistic news such as the recent announcement that CME Group will launch bitcoin futures contracts.

Lee’s tepid tone is not unusual on Wall Street. Many executives and analysts remain unconvinced that bitcoin has staying power.

However, unlike the legion of skeptics in the mainstream financial industry, Lee is one of bitcoin’s most ardent supporters and has earned a reputation as the biggest bitcoin bull on Wall Street. For months, Lee has grabbed headlines with his prediction that the bitcoin price will reach $6,000 by mid-2018 and $25,000 by 2022.

However, the bitcoin price has now exceeded Lee’s short-term price target by more than $1,000, and he is concerned that the rally is getting ahead of itself, citing “contemporaneous fundamentals” in a note distributed to Fundstrat clients this week.

Fundstrat’s bitcoin valuation strategy is modeled off of Metcalfe’s law and predicts that bitcoin’s fair market price is the square of the number of its users times the average transaction value. Lee claims that this model accounts for bitcoin’s recent trajectory with more than 90% accuracy, and he does not believe the network’s user base has grown enough to justify the present bitcoin price.

In the near-term, Lee recommends purchasing bitcoin if it falls into the $5,500 range and purchasing shares of the Bitcoin Investment Trust (OTC: GBTC) at $750, but he maintains his mid-2018 price target of $6,000 and five-year target of $25,000.



Source: https://www.cryptocoinsnews.com/bitcoin-bull-tom-lee-cautious-as-bitcoin-price-nears-7500/

[d5000]

In my opinion, his stance is reasonable. I think the rally overheated - well, I thought it already at $5000, but one more bullish leg is always possible if the whales allow it (and if there's "free money" to grab because of the forks )

But price movements seems to get increasingly more nervous, so it's an indication for me that we're nearing the top. A major downward movement that lasts for more than a day could lead into a panic and prices again around $5000.

I'm curious how Tom Lee calculates the user base for Bitcoin. Does anybody know his formula? The only similar "system" I know is to use the transaction activity. I found that article but he doesn't really explain if he uses, for example, addresses, "active addresses", or full nodes ...

[CryptoBry]

There can be really some overheating here. There is nothing wrong with a rise but a rise with this big can be a prelude for a big correction later. Maybe Bitcoin should be settling first at $7000 level before making any advances beyond that mark. We should be giving more time for the market to slowly digest what can be happening and start gathering the needed inertia for future kick in value. In economy, too much growth can be a big problem in the same way that an anemic one can be a big challenge too -- the same thing can be true with Bitcoin.

[Kemarit]

I'm also getting nervous with this rapid price increase that we are seeing, its not normal and organic. Are there people behind trying to manipulate the price again on their favor? I'm feeling that something is brewing out there and maybe once they see that the price is somewhat stable, then will make their moved and push the sell button creating a domino effect causing it to crash. However, with the roller coaster ride that we are seeing, it is not ripe for such actions. I'm seeing swings of $200 is just matter of minutes. We all know that their meteoric rise can't be sustained long term, its just a matter of time that someone will enter a big sell order that everyone can see.

[777Bitcoin]

The concern is legit, the surprising rally of increases this week might give a negative return for due time. Maybe he is wrong or overthink it, maybe I’m also wrong for agreeing to him but being cautious is the right thing a good investors must be prepared. Because as we all know that the fork is still coming and waiting to make a big impact to bitcoin.

[jekjekman]

The rise on bitcoin's price for the past week is because of the increasing demand
of the coin from people who wants to take advantage of the upcoming fork. He is right
 that the price might be corrected but not before the fork since almost everyone is
hodling their coin for the free token. I am even expecting the coin to go $1000
more before the fork come.

[Nameless27]

This increases is huge for some but for me it’s a little slow if we compared it to the increasing demands and rapid popularity of bitcoin. This is just enough and nothing to be worried about. Bitcoin is an investment that rely on the purchasing power of the community/investors so this correction thing is just a speculative nature of human in selling they’re hold bitcoin after the fork.

To be cautious is good but to be panicked is the worst emotions that a bitcoin investors must avoid. Getting nervous is a negative feeling than can only be change when we do think the positive way.