Fundstrat’s Tom Lee flatly refused to reassess his bold prediction that bitcoin would hit $25,000. Bitcoin had dropped to $7,362 at 10 am GMT on Thursday having nearly hit $20,000 in December 2017.
CNBC’s Jackie DeAngelis asked Mr Lee: “Make the case to me. From an investor out there, why do I want to buy Bitcoin now, because it seems like a scary trade? “
He replied: “I think the chart is pretty scary for folks because bitcoin was $20,000 in December and it is less than half of that now. But the reason investors should care about this is, number one, I think that the notion of blockchain as the way to solve trust in a digital world has gained a lot of traction especial out of consensus (conference).”
“What investors aren’t connecting is that you can’t necessarily just say that ‘I believe in the blockchain.’ Bitcoin and cryptocurrencies are essential to how blockchains act in the securities.”
Mr Lee said that the cryptocurrency has hit the level it costs to produce, comparing it to gold which is trading at nearly double the price it costs to extract from the earth.
He said: “The case I’d make for Bitcoin is, one, the cost of producing and replicating a bitcoin today as a store of value is around $8,000 fully loaded.”
“So bitcoin is trading at cost. Gold as another store of value is trading at more than twice it’s extraction cost.”
Bitcoin is frequently compared to gold as it is frequently treated as a speculative or store-of-value asset. The investor said that increased interest from financial institutions could also provoke an upturn in the cryptocurrency’s value.
He said: “I think institutional investors have gained a lot of interest and they haven’t really come into crypto yet as there is still some regulatory uncertainty.”
“But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why bitcoin rallies.”
“I think it’s a great story, it’s a great technology and I think it is underappreciated and that’s why we like it at $8,000.”
“Although it feels miserable to hold bitcoin at $8,000, the move from $8,000 to £25,000 will happen in a handful of days.”
Despite Mr lee’s bullish comments, the digital currency has faced criticism by banks and finance experts, with billionaire Bill Gates telling CNBC he would bet against the cryptocurrency and short bitcoin if he could.
The Microsoft co-founder said: “As an asset class, you’re not producing anything and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of investment.”
He added: “I agree I would short it if there was an easy way to do it.”
Bank of England Governor Mark Carney also has been highly critical of the cryptocurrency landscape. He said it is a “privilege” to be part of the financial system and “responsibilities come with those privileges”.
But prior to the G20 summit, Mr Carney said cryptocurrencies do not pose a risk to financial stability.
Source : EXPRESS