Category Archives: Fundstrat

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Tom Lee Explains Why His Post Consensus Bitcoin Prediction Went South

Fundstrat Global’s outspoken co-founder and cryptoanalyst Tom Lee, has explained to CNBC why he feels that his predictions of Bitcoin getting an injection from the last week’s New York Consensus Conference, didn’t actually come to fruition.

Although Tom Lee stands by his prediction of $25K by end of 2018 position, he suggests that the reasons the market, not only didn’t receive the suggested boost but in fact, lost value, was mainly due to the current lack of clarity in regulation and custodial announcements at the conference. Firstly, he explained why the bitcoin price should have gained from the Blockchain week of events in NYC:

“Given conferences like Consensus are chances for the community to gather in a centralized place and meet constituents new to the community (growth in attendance), it seems natural that the combination of ‘sanity check’ (all is OK and progress is happening) plus ‘new interest’ (incremental attendance) should strengthen the crypto-community’s conviction… And coupled with growth in incremental constituents, should have aided crypto-currency prices.”

Lee clearly wasn’t alone in expecting a bitcoin rally after the conference. Many were expecting a surge due to the popularity of the event and the number of attendees, particularly after months of uncertainty in the cryptocurrency market, and bitcoin’s recent signs of slow recovery. The total crypto market cap actually sank by $40 billion during the conference and bitcoin price declined by 3 percent.

Lee maintains that it wasn’t all negative, suggesting, “I think Consensus was a huge success. It is a great conference to bring a lot of people together from around the world. The quality of the people that were there was amazing.” He added:

“Bitcoin doesn’t have to go up every day to move from $8,000 to $25,000. The ten best days account for all the return of bitcoin in a year. If you didn’t own bitcoin for ten days each year, you lost 25 percent each year.”

The Fundstrat analyst suggested that crypto enthusiasts expect that regulation needs further careful clarification and discussion, and was disappointed at the lack of a current nuanced approach by regulators in this regard.

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Fundstrat Analysis Indicates Mining May Push Bitcoin to $36K by 2019

Tom Lee, co-founder of Fundstrat Global Advisors research institute, revealed on Thursday via Twitter new data provided by the group that predicts the price of Bitcoin will reach USD 36,000 by the end of 2019. The anticipated price inflation has been attributed to Bitcoin mining.

Fundstrat’s Quantamental Strategist Sam Doctor provided a breakdown of the correlation between the costs of Bitcoin mining, and the price of the cryptocurrency itself. The conclusive results from the study indicate that Bitcoin’s value will progress to somewhere between USD 20,000 and USD 64,000 by the end of 2019.

CRYPTO: Our quant/data scientist @fundstratQuant publishing #bitcoin mining white paper. Crypto mining economics lead/explain $BTC price—suggests $39,000 per bitcoin by YE19. key takeaways below… pic.twitter.com/f5ZQ4py3jS

— Thomas Lee (@fundstrat) May 10, 2018

Doctor’s calculations are predominantly focused on Bitcoin Price to Mining Breakeven Cost Metric, or P/BE, which is described in the executive summary posted by Lee above, as having a ”proven and reliable long-term support level”.’

Part of Doctor’s analysis focuses on the increasing energy efficiency of the mining network, and an escalation of large-scale operations over individual setups. The summary notes that in order stay competitive, it is becoming necessary for individual miners to join mining ”pools”, with the aggregate mining economy expected to grow.

However, it is possible that a material shift in the predicted route of hash power could alter the P/BE support level of Bitcoin’s value. This is noted as the main risks to Fundstrat’s thesis.

The trajectory outlined in the summary above falls in line will Lee’s personal prediction of Bitcoin’s year-end target reaching USD 25,000. Earlier this week, he elaborated on this by anticipating a Bitcoin price rise concurrent with the blockchain and digital currency Consensus Conference in Manhattan that begins Monday.

Last month the 17 millionth Bitcoin was mined, meaning there is less than 20% left to uncover. Bitcoin’s scarcity is a valuable asset in increasing the value of the cryptocurrency. With 21 million Bitcoins in total, the exact year suggested for the final to be mined is 2140.

 

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Tom Lee Says HODL Bitcoin As Year-end Target Stays at $25,000

Bitcoin proponent and former chief equity strategist at JPMorgan Chase & Co. Tom Lee, has recently encouraged Bitcoin traders to hold their coins despite its loss of 40% value so far this year.

Lee’s experience as a stock analyst has given him heightened insight into the current market slump Bitcoin is experiencing. In a note written by Lee on 28 April, he describes the current situation as a matter of market timing, which is usually advised against in traditional equity investing.

As Lee alluded to, “If an investor missed out on the 10 best days (for S&P 500) each year, the annualized return drops to 5.4 percent (ex-10 best), from 9.2 percent. In other words, the case for buy and hold in equities is the opportunity cost of missing out on the 10 best days”.

Based on Lee’s statement, this means that if an investor missed the 10 best Bitcoin preforming days every year their annual returns would decrease by 25%.  Fundstrat data released by Lee, who heads the research department, shows that on average Bitcoin was in fact down every year if the top 10 day gains are excluded.

Considering the majority of Bitcoin market gains are condensed into a small number of days each year, Lee recommends that holding is the most potentially profitable option.

HODL on

Despite the recent market instability across a number of cryptocurrencies (notably Ethereum), Fundstrat still holds the prediction that the value of Bitcoin will cross USD 25,000 by the end of 2018.

One of the main obstacles Bitcoin faces is uncertain regulatory conditions that disincentivize potential investors. Fundstrat analysts included in the same note as Lee said that they expected Bitcoin challenges to subside by the latter part of 2018, including ”the clarification of regulatory hurdles”.

A number of countries have recently pursued legislating cryptocurrency regulations, including France, Malta, and Australia.

The predictions from Fundstrat may well encourage many to HODL, the now infamous typo of a frantic trader’s appeal to hold on to Bitcoin, that has become the mantra of Bitcoin enthusiasts.

 

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