Fundstrat’s head of research, Tom Lee, expresses optimism regarding bitcoin, attributing it to the recent regulatory crackdown on the industry. According to Lee, this scrutiny has effectively “battle-tested” bitcoin and has the potential to propel its value to exceed $200,000 within the coming years.
He shared his positive outlook on bitcoin in an interview with CNBC on Monday.
Regarding Cathie Wood’s extremely optimistic prediction for bitcoin, with a target of $1 million, Lee acknowledged that her reasoning is not unfounded.
I think her idea of network value for bitcoin and scarcity still argues that, if this isn’t an upcycle, her numbers are correct, you know, something in the $200,000-plus range.
The foundation of his valuation primarily relies on the recent regulatory crackdown that has shaken the digital asset industry and markets, effectively subjecting bitcoin to a rigorous “battle-test.”
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In a significant move this month, the Securities and Exchange Commission (SEC) initiated legal proceedings against popular digital asset exchanges Coinbase and Binance. The SEC alleged that both platforms have been unlawfully providing unregistered securities to their customers while operating in violation of U.S. laws.
Although the Securities and Exchange Commission’s actions may pose challenges for various tokens, they are anticipated to serve as a tailwind for bitcoin. According to Lee, the regulatory crackdown has had a relatively minor effect on bitcoin’s price, as it had already reached a low point around $25,000. Consequently, the overall impact on bitcoin has been favorable.
Simultaneously, the prevailing uncertainty has created an opportunity for prominent Wall Street players to make their push into the digital asset market. This includes notable names such as BlackRock, the largest asset manager globally, which recently submitted a filing with the Securities and Exchange Commission (SEC) to establish a bitcoin exchange-traded fund (ETF).
Related reading : WisdomTree Follows BlackRock’s Lead, Filing Application For Spot Bitcoin ETF
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There’s been sort of an exit stage left for a lot of players, but then we’ve replaced them with some of the traditional players that have a lot of credibility, like the Blackrock and the Citadels coming into bitcoin.
The announcement of the ETF propelled bitcoin to surge by more than 21% from its low point in June. As of Monday, bitcoin is being traded at approximately $30,110.
Lee further noted that bitcoin enjoys advantages as a risk-on asset. Additionally, considering the upward momentum in the S&P 500 and Nasdaq, historical patterns indicate that the digital money is poised to continue its ascent.
Throughout 2023, bitcoin has experienced a steady yet volatile upward trajectory.
It witnessed a significant surge during the spring season, driven by the increasing appeal of its decentralized nature amidst the banking crisis triggered by the downfall of First Republic Bank, Silicon Valley Bank, and Signature Bank.