The Bitcoin bull who had earlier in the year predicted a year-end price of $25,000 says that the market is wrong.
Thomas Lee, managing partner and the head of research at Fundstrat Global Advisors who has been a prominent Bitcoin advocate had earlier in May this year predicted a rally that would take the price of bitcoin to over $25,000.
While Bitcoin consolidated in the price range between $6000-6500 in the September to October period, Lee maintained his bullish sentiments despite the sideways price action. By mid-November, Lee had toned down his year-end prediction to $15,000.
The price of the leading cryptocurrency has since crashed further and is currently trading around the $3400 level. However, according to an article published earlier by Bloomberg, Lee maintains that the fair value of the digital asset is around $14,800.
The Rationale Behind the Argument
Earlier on Thursday, the Fundstrat research head said that bitcoin’s fair value was between $13,800 and $14,800. In support of his case, Lee quotes the number of active wallet addresses, usage per account and factors influencing supply as the parameters that determine the fair value.
According to Lee, the price divergence can be attributed to last year’s exponential rally, a “meltdown” in the macroeconomic climate and treasury sales by the ICO projects.
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.
Maintaining his stand, Lee believes that going ahead mass adoption and Bitcoin’s acceptance as an asset class is what will drive its price upwards.
According to the wall street strategist and his model, if the number of Bitcoin wallets reaches just 7% of Visa’s 4.5 billion account holders, the fair value of Bitcoin would be $150,000.
Lee declined to update his year-end price prediction and concluded:
We are tired of people asking us about target prices.
2018 has been a tough year for investors and holders of cryptocurrencies. Despite growing adoption and positive news in the last couple of months, the meltdown has continued, and the overall cryptocurrency market has declined close to 90% from its all-time highs in January. As 2018 is nearing an end, Lee and other crypto enthusiasts are hoping that 2019 will bring the smiles back.
Do you agree with the views of Thomas Lee? Let us know in the comments below.
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