Fundstrat Founder Tom Lee isn't so positive on the stock market these days, but he's amplifying his bullish bet on bitcoin.
ADVERTISEMENT
Wall Street's biggest bear thinks bitcoin will surge to $6,000
Fundstrat Founder Tom Lee isn't so positive on the stock market these days, but he's amplifying his bullish bet on bitcoin.
DON'T MISS:
In a note on Friday, Lee forecast that the cryptocurrency could rise to $6,000 a coin by the middle of next year.
He said the big driver of this 29% rally through mid-2018 would be greater public awareness of bitcoin as a method of payment and as a store of value like gold. He maintained his 2022 target of $25,000.
"We see bitcoin as gaining from institutional sponsorship, improving transaction platforms and ultimately, greater public adoption," Lee said.
ADVERTISEMENT
Investors who don't want to buy bitcoins will soon have a way to invest in the cryptocurrency. In July, the Commodity Futures Trading Commission cleared LedgerX, a cryptocurrency-trading platform, to offer bitcoin options by this fall. While also making it easier for investors to bet against bitcoin, Lee sees this as a bullish development because it would increase participation.
Central banks could also jump in. "While one may say this is preposterous to say central banks would own bitcoin — we believe that Central banks would view crypto currencies differently if Bitcoin’s aggregate value exceeded $500 billion," Lee said.
His forecasting model for bitcoin's value is based on Metcalfe's Law, which stipulates that a network's value increases exponentially based on the number of users within it. Lee projected that bitcoin user accounts would grow 50% by 2018.
Technical analysis — traders' use of chart patterns for forecasting — also suggests that bitcoin is set to continue climbing. The cryptocurrency this year broke out of a four-year trading range.
"Short-term traders should be prepared for another volatile consolidation period heading into late August given the XBT is nearing our next resistance levels with daily/short-term momentum becoming overbought," Lee cautioned. Bitcoin has surged about 337% this year.
ADVERTISEMENT
Lee's year-target for the S&P 500 is 2,275. It's the lowest among strategists at major firms tracked by Bloomberg, and implies that the index would fall about 6% from Friday's opening level.
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
ADVERTISEMENT