Tom Lee Adjusts End-of-Year Bitcoin Price Prediction by $3k amid Slumping Market
Fundstrat research chief Tom Lee has revised his end of year bitcoin price to $22,000 amid the slumping cryptocurrency market.
Earlier this year, Lee made a prediction that the world’s biggest cryptocurrency would be seeing $25,000 at the end of 2018. However, while speaking at the 2018 Asia Blockchain Summit, the Fundstrat research chief forecasted that Bitcoin would reach $22,000 by the end of the year.
Lee stated that Bitcoin should be trading at twice the mining cost, under normal market conditions. He noted that with the current BTC mining cost at $9,100, Bitcoin will reach $22,000 before the end of 2018.
The Fundstrat research chief had initially forecasted a price surge after the Consensus conference in May. The rally failed to materialize. Lee also predicted that Bitcoin would be back at $20,000 by the middle of the year.
The entire cryptocurrency market has suffered huge decline since the start of this year, with bitcoin failing to come anywhere near its mid-December 2017 highs. Last month, BTC fell below the $6000 mark, setting new 2018 record lows in the process. The cryptocurrency market is beginning to see some recovery in July, with BTC attempting to cross the $7,000 threshold.
Speaking about the price decline, Lee identified three possible reasons behind the drop. First, the lack of regulatory clarity puts huge pressure on the market, driving prices to decrease in the process. He also indicated that the significant market correction that has occurred on multiple occasions this year could be a factor affecting the market negatively.
In 2014, Bitcoin also experienced a massive decline, dropping 70 percent in 300 days. It took only 200 days to achieve the same price dip, and Lee believes that the correction period will be much shorter.
Lee concluded that the declining cryptocurrency market follows the emergence of Bitcoin futures. This could be correct as financial giants CBOE and the CME groups launched futures contracts on bitcoin on Dec. 10 and Dec. 17 respectively, a period during which bitcoin attained its peak at $19,000, but then began to fall.
Nevertheless, there are strong indications that BTC futures trading have an inadequate volume to affect the price of the asset significantly. Moreover, Bitcoin futures trading are cash-settled and there is no physical delivery of the underlying asset.