There is no denying that everyone is already talking about cryptocurrencies and Bitcoin once again. On April 3, Bitcoin was able to surpass $5,000. Though it has been floating around $4,800 to $5,000 recently, many are speculating that this could actually be the start of another bull run. Could it really be a bull run or will it drop once again?
Bitcoin has the history of entering massive correction before being able to recover and surpass its peak. Last December 2017, Bitcoin was able to hit near $20K. And as expected, Tom Lee is back with his comment on Bitcoin. Tom Lee was the one who predicted that Bitcoin was about to surpass its peak last year. Unfortunately, it didn’t happen. Instead, Bitcoin lost around 80% of its peak price.
The Fundstrat head of research and co-founder mentioned that Bitcoin’s current fair value is easily quintuple digit range. He thinks that 2019 is looking much better than 2018 already. He considers the “old whale wallets buying Bitcoin” and “a lot of positive things taking place” within the crypto market that could signify a bullish run for the cryptocurrency. He even thinks that the fair valuation for Bitcoin is at $14K.
How Did He Come Up With The Number?
According to Tom Lee, the valuation is dependent on the Bitcoin’s history that it is always valued to be at 2.5 times its cost to mine. Right now, Bitcoin costs around $5,500 to mine. It means that the price is actually at $14K range. This is quite an interesting statement considering that a few weeks ago, Lee mentioned that the fair value for Bitcoin was at $25K.
What Can Make Bitcoin’s Price to Go Up?
Tom Lee believes that there are a number of things needed in order to make the price of Bitcoin go up again. He thinks that institutional investors are still going to play a major role. For instance, you have Fidelity’s soft launch of their custody solution. Also, you have the likes of JP Morgan going after blockchain technology. Though JP Morgan Coin isn’t a cryptocurrency considering that it is used internally and is pegged to the US dollar.
He also believes that the state of macroeconomy could have an effect on Bitcoin. One of the interesting points he made was that in 2018, the MSCI Emerging Markets Index pulled Bitcoin’s price in 2018. This particular index lost around 27% while Bitcoin lost around 70%. For Lee, he is predicting that the emerging markets could outperform the US equities this year and this could even get Bitcoin to $10K level or even to $20K level.
One of the most important things that needs to be achieved in the crypto market today is regulatory clarity. Unfortunately, this isn’t happening yet. However, recently, two commissioners of the US Securities and Exchange Commission published guidelines for cryptocurrencies. This will help determine whether or not the cryptos are going to fall under securities or commodities. Though it isn’t an official ruling, this is a big deal.
So far, Bitcoin and Ethereum were considered by the agency, not as securities. On the other hand, other cryptocurrencies are still in a grey area.