Wall Street strategist and Fundstrat cofounder Tom Lee has been described as a Bitcoin bull. However, Lee seems to be slightly less optimistic about where Bitcoin is headed before the end of the year–on CNBC’s Squawk Box, Lee appeared to shy away from his prediction that BTC would be worth $25,000 at the end of the year to a slightly more modest figure.
“Bitcoin has historically traded at 2.5 times its mining costs. It’s not out of the question that it could be over $20,000 by the end of the year at fair value,” he said, later clarifying that he still thinks a $25,000 year-end valuation is possible. Lee later said that he “may have misspoke a little bit,” clarifying that “we still think bitcoin can reach $25,000 by the end of the year or something like that.”
Still, he said that “…given where mining costs will be and applying the historical average of 2.5 times mining costs, that would imply fair value over $20,000, roughly $22,000.”
Lee believes that investors shouldn’t be wringing their hands over a few thousand dollars. At press time, Bitcoin was trading for roughy $6,350, not far from its year-low of roughly $5,900. A $20,000 valuation at the end of the year would still be more than a three-fold increase for BTC.
Will Price Follow Hash Rate?
Despite the doldrums that BTC has been stuck in for months, Lee believes that the price of BTC will eventually rise to reflect the increasing amount of ‘hash power’ (computing power) that is needed to mine each coin. “The reason bitcoin looks really good here is the cost of mining around $7,000 fully loaded. And the difficulty is rising. So by the end of the year, it’s going to be $9,000,” he said.
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His views echo those of journalist and Wall Street veteran Max Keiser, who tweeted in June that “price follows hashrate.” An increase in transaction fees and Bitcoin’s mempool also increased throughout the month of June, signs that some believe could be pointing towards a higher valuation for BTC.
Price follows hashrate. https://t.co/p73ovdZarC
— Max Keiser (
) June 19, 2018
Lee sees this point in Bitcoin’s journey as a very normal continuation of a technology in its relatively early stages of life. Speaking of his time spent as chief equity strategist at J.P. Morgan from 2007 to 2014, Lee said, “I did wireless [research] in the 1990s. I saw 20 years of mobile and internet convergence. To me, this is not that different in terms of how an industry [changes] over time.”
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