A lot of predictions have been made concerning the fluctuations of the bitcoin price, but Tom Lee who is a Co-founder and Fundstrat strategist has held onto his prediction that Bitcoin will reach $25,000 despite its recent performance. An evolution of Bitcoin prices during 2018 by Tradingview showed an overwhelming fall in its history, which is falling from as high as $20,000 to as low a $7,500 as of May 24, 2018. However, Tom Lee who earlier predicted that Bitcoin would reach a record high is so optimistic about his predictions concerning the Bitcoin price, and he considers this fall as a “typical crypto volatility.”
Cryptocurrency thrust quickly below $8,000 and traded around $7,500 thereby giving up most of the gains bitcoin had managed from mid- April to early May after hitting 2018 low as reported.
Tom Lee seems not to be moved by this current downturn of the Bitcoin performance as he believes that the most significant thing is to have a certain amount of Bitcoins for a whole year in order not to lose an increasing streak that lasts for an average of 10 days for a whole year.
The Three Basic Reasons.
Amazingly, Tom Lee seems quite positive about his predictions and an interview revealed three basic reasons why he seems so optimistic.
Firstly, Tom Lee’s optimism is confirmed by historical data from Fundstrat. Tom Lee describes the Bitcoin’s behavior as bullish. He said:
“Historically, 10 days comprise all the performance in any single year of Bitcoin’s price. If you just took out those 10 days, Bitcoin’s down 25 percent a year. So as miserable as it feels holding Bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days.”
Moreover, he also believes that many institutional investors have not fully participated in crypto space though shows interest in it. This attitude of most investors can be attributed to fear of some regulatory issues of government. He said:
“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because 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.”
Also, Tom Lee added that:
“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of day.”
Bitcoin is now down by 41 percent this year after Wednesday’s drop.
Lastly, the cost of Bitcoin mining is considered to be one of the basic reasons for Tom Lee’s optimistic behavior. He perceives there will be an upsurge in Bitcoin’s value due to this shortage leading to an increasing equilibrium. This can be achieved in the long term as there is an increase in its adoption.
With the many predictions concerning the performance of the cryptocurrency, few of them have been quite negative. The Quinlan Associates some time ago predicted that Bitcoin would trade as low as $1800. However, most of the expert predictions have been a positive one for the Bitcoin price.
Nick Colas at Data Trek Research, an analyst who has been covering the Cryptocurrency for at least four years predicted that Bitcoin will trade within the range of $6,500 to $22,000 in 2018. Being the first analyst to cover this, he also said there will be at least a 40 percent drop in the price of Bitcoin as well as wild price fluctuations which will be accompanied by four market crashes.
Nick Colas added that:
“The only way it goes substantially higher is if/when someone comes up with a large-scale business that uses bitcoin. That may come in 2018. But for now that scalable use case is asset protection, so that’s how we value bitcoin today.”
This prediction, however, contrasts with that of Tom Lee’s since he predicts Bitcoin rising to 25k irrespective of the current fall. Nick Colas said a midpoint range of $14,035 would be a reasonable price point.
The big question still remains, will Bitcoin be able to rise to such rate despite the current fall? Only time will tell.
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