This year, regulatory changes happened mainly to end the Wild West crypto market. And though there were changes in regulations that have ultimately led towards a bearish market, many were hopeful that it could bring stability and maturity in the crypto market. And throughout the year, many were expecting institutional investors to enter the market.
Unfortunately, though there are the likes of ICE that has even partnered with Microsoft and Starbucks to bring Bakkt, not to mention you have the possibility of a Bitcoin ETF soon, things aren’t looking good for cryptos. Recently, Bitcoin crashed to its lowest level for the year after the Bitcoin Cash hard fork.
Mike Novogratz even thought that Bitcoin has already bottomed even saying that investors were fatigued. You also have the likes of Tom Lee who mentioned before, that despite Bitcoin staying at around $6,200 to $6,500 in the last months, that it was still possible to end the year at $25K. However, recently, this prediction has been affected by recent price movement.
From $25K to $15K
Tom Lee predicted on Friday that the year-end target has been lowered from $25,000 to $15,000. According to reports, the break-even point level for Bitcoin mining cost should be at around $7,000. That was a drop from supposedly $8,000. According to that, Tom Lee estimated that the price of Bitcoin by the end of the year is around 2.2 times the new estimated break-even price.
But it isn’t just Bitcoin that dropped in value. In fact, other altcoins also experienced this. There were some altcoins that experienced double-digit losses. However, you have the likes of XRP that somewhat sustained far less drop because of its partnership with institutions.
Betting on Recovery
Lee believed that Bitcoin is going to recover soon. He thinks that even during the 2013 to 2015 period, Bitcoin “never sustained a move below breakeven”.
He also mentioned that “While bitcoin broke below that psychologically important $6,000, this has lead to a renewed wave of pessimism”. Lee added that “But we believe the negative swing in sentiment is much worse than the fundamental implications”.
Lee believes that the movement was mainly due to “crypto-specific” evens such as the disagreement within Bitcoin Cash. As a result of the conflict, Bitcoin Cash was split into Bitcoin ABC and Bitcoin SV. It seemed that Bitcoin in October was immuned from sell-off as it showed stability. In fact, it was even less volatile than the Netflix stocks.
Lee is a believer of crypto. He thinks that there will be the involvement of institutional investors that can help bolster the price of cryptos by the end of the year. He believed that the launch of Bakkt and Fidelity entering the crypto market could easily do the trick. Lee thinks that both Bakkt and Fidelity could be “part of a broader creation of infrastructure necessary for institutional involvement”.
Also, let us not forget that there could soon be a Bitcoin ETF. This could mean that institutional investors can have an easier time to invest on cryptos. This can bring potential billions of dollars into the crypto market.