Opening any index of crypto prices this week has been like watching “A Nightmare on Elm Street” for the first time; parted fingers over the eyes plus sharp intakes of breath and the occasional involuntary leap out of your seat.
We have been here before earlier this year, but it all seemed to be going well, if not super well, for the last few weeks, and now this downturn again. However, Tom Lee, believes that all is not lost — so let’s have a look at why he’s not filled with FUD.
Lee, who is a co-founder of Fundstrat, predicted this month that BTC would reach $25,000, and despite its drop to below $8,000 today, he told CNBC that he has three reasons for continuing to stand by his conviction about the crypto.
He believes that the plunge today, 24th May, is only due to “typical crypto volatility” and the first factor he cites as proof that its value will bounce back and rise to even greater heights is that BTC was “trading at cost”, because the price of production was almost equal to the trading price. And Lee believes it is worth more than its mining cost.
Lee also takes the view that another price hike will come when major investors enter the market. They haven’t until now, because of all the uncertainty around regulations. 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.”
And his third point concerns his recommendation that investors hold on to their BTC:
“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.”
To sum up, believe that BTC will rise again and hope that regulatory uncertainty is ironed out. There are many reasons to have faith in cryptocurrency, not least of which is this: it’s not going to just quietly go away.