Fundstrat Managing Partner and Head of Research Thomas Lee is sticking to his guns despite Bitcoin’s flailing fortunes, saying that its fair market value is no lower than USD 13,000 and as high as USD 14,800.
Thomas Lee predicted that Bitcoin would hit USD 25,000 by the end of 2018, and while that forecast is all but guaranteed to go out the window by some distance, he insists that evidence of the growing number of active wallet addresses, usage per account, and factors influencing supply calculates fair market value at far higher prices.
Without disclosing the exact formula that combines these indicators, Lee attributes Bitcoin’s “meltdown” below fair market value to ICO companies selling off their treasuries, and the overall macroeconomic climate.
Bitcoin News also examined the possible causation driven by the launch of Bitcoin futures on CME. The Bitcoin market began its steep descent from USD 20,000 on 17 December 2017, the same day the futures launched. The Federal Reserve confirms that the launch of Bitcoin futures is a primary cause of the decline in Bitcoin’s price.
Combining Lee’s analysis and the Federal Reserve statements regarding Bitcoin futures, it can be postulated that Bitcoin really is below its fair market value due to the Bitcoin futures, and that price has become decoupled from reality. If this is true, it is similar to what happened to the spot gold markets after futures became a dominant force.
Essentially, once futures markets are introduced to an asset class, the fair market value no longer determines spot value. This theory is perhaps not well-known in the crypto space, leading to numerous price forecast busts in 2018.
Asked to update this forecast, Lee responded, “We are tired of people asking us about target prices.” Perhaps Lee now understands the tried and true weatherman adage that one should not make a forecast unless they have to.
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