Wall Street analyst Tom Lee believes that bitcoin’s enormous upside renders it an “important” asset for investors to get.
Lee, a managing partner at Fundstrat and also a former chief equity strategist at Goldman Sachs, explained his reasoning the 2009 week at Yahoo Finance’s All Markets Summit, nevertheless bitcoin represents a “huge revolution with regard to decentralized control”:
“It’s a huge revolution relating to decentralized control,” Lee said. “It’s biomimicry, finally, in your technology industry. A suitable structure for maintaining encryption and security. But a result of the nature of blockchain it’s also an asset class.”
The market strategist, having been termed one of Wall Street’s “biggest bears”, is kind of bullish about the two short- and mid-term prospects of one’s bitcoin price.
Wall Street acknowledges Bitcoin’s rise
He believes that increasingly, younger investors will begin to use bitcoin for a store needed instead of gold and silver, which served this purpose during the pre-digital era. Moreover, he notes that bitcoin price is uncorrelated to equities and traditional market factors, allowing it to be an “important security” for investors to possess.
“And I think this year has proven that Bitcoin is uncorrelated to equities, gold, low interest rates, commodities. Regarded as important security, I feel, for investors to get.”
Using a model influenced by Metcalfe’s law — which states the fact that value of a network is proportional to the square availablility of that network’s member list — he has established “conservative” bitcoin price targets of $6,000 by mid-2019 and $25,000 by 2022.
“If you modeled simple things like square the amount of users plus transaction value, it’s explained 94% of [Bitcoin’s price appreciation] the year 2010,” Lee said. “Using a 90% deceleration of both factors [in Metcalfe’s Law] the new year gets a person to $6,000 by mid-2019 “.