Tom Lee has cut his year-end prediction for Bitcoin by 20 percent — but still thinks the first and foremost cryptocurrency will top $20,000 per coin in 2018.
‘OR SOMETHING LIKE THAT’
Tom Lee had previously held strong on his prediction that Bitcoin $6647.68 +0.09% would reach a new all-time high of $25,000 by the end of 2018. Now, the only Wall Street strategist to make concrete Bitcoin predictions is scaling back his expectations — but only slightly.
The co-founder of Fundstrat Global Advisor told CNBC’s “Squawk Box”:
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.
However, Lee later explained on the network’s “Fast Money” that he “may have misspoke a little bit.” He told:
What I was trying to illustrate was 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. We still think bitcoin can reach $25,000 by the end of the year or something like that.
Lee, a noted permabull, refuses to budge more than a few inches on his prediction — which he bases primarily around the break-even cost of Bitcoin mining. “The reason bitcoin looks really good here is the cost of mining around $7,000 fully loaded,” he stated, “And the difficulty is rising. So by the end of the year, it’s going to be $9,000.”
It should be noted that Lee has been wrong with his predictions before — particularly when he called for a massive bull run following May’s high-profile Consensus conference. Said bull run never happened, and the price of Bitcoin has thus far failed to revisit the highs it saw that month when it almost touched $10,000.
Last month, Lee told Bloomberg that Bitcoin’s dramatic and sustained price declines in 2018 have been the result of futures contracts expiring — noting then that there had been six expirations of futures contracts since the CBOE launched Bitcoin futures back in December. According to Fundstrat’s co-founder, the market leader tends to see a decline of around 18 percent in 10 days before the expiration of the futures contracts with prices generally recovering in the following six days.