Why Bitcoin Could Head Higher, According To Tom Lee
Bitcoin (BTC) surged past $5,000 mere weeks ago, and Tom Lee, the head of research at Fundstrat Global Advisors, wants back in on the crypto space. The notable industry analyst, known for the price predictions he made in 2017 and early-2018, claimed in a recent CoinTelegraph segment that BTC is likely to stage a “pretty big recovery” in the coming eights months, and here’s why the permabull thinks so.
First, he looked to an indicator that has firm has established, the Bitcoin Misery Index (BMI). The Fundstrat co-founder claimed that his firm’s proprietary aptly-named Misery Index, which weighs an array of factors to find out Bitcoin investor sentiment, reached a reading of 89 (very happy) on April 2nd, which was when BTC rallied past $5,000.
This is the highest reading since June 2016, and could indicate that overall bullish behavior for Bitcoin is on the horizon. As Lee explains, since 2011, a misery reading of over 67 came only during bull markets. However, when Misery peaked above 67, BTC, on average, fell by 25%, as investors look to take profits. The Fundstrat executive did may it clear though that even if a drop is inbound, Bitcoin has more likely than not seen its one-year bear trend end at $3,000.
Next, Lee looked to the fact that BTC surpassed its 200-day moving average, which sits around $4,600. As the analyst explains, “in any market, people tend to think an instrument/asset is in a positive trend when it’s above its 200-day. This means that Bitcoin’s recovery is “taking place faster than we expected, and that its price recovery cycle won’t be any different than the past.”
Expanding on that thought, Fundstrat’s de-facto figurehead explains that with the Bitcoin block reward rapidly approaching, the levels of investment the underlying space has seen in the past 24 months, the strong fundamentals (network activity in terms of transactions and fees), and the relative puny nature of the cryptocurrency ecosystem, he believes BTC could easily recover to its $20,000 high, and potentially even move past that.
Bitcoin’s Fair Value Sits At $14,000?
So sure, BTC is likely to head higher from here, but where exactly could it move to in the short-term? While not a prediction, Tom Lee says Bitcoin’s current fair value sits around a jaw-dropping $14,000, meaning that a move to such a level wouldn’t be unbacked by fundamentals, and could be entirely possible. Here’s why.
As reported by Ethereum World News on a previous date, Lee remarked that if Bitcoin follows the S&P 500’s recent action within 2.5 standard deviations, in that investors are looking for more risk assets, such as cryptocurrencies, BTC could hit $10,000. In another message, Lee suggested that over much of the cryptocurrency’s history, BTC was valued at 2.5 times its cost to mine. With Fundstrat estimating that this point sits in the $5,500 region, the $14,000 price prediction of sorts was extrapolated. This interestingly comes just weeks after Lee opined that even $25,000 was “fair” for the crypto.
Title Image Courtesy of Icons8 Team Via Unsplash