Fundstrat Global Advisors Head of Research, Tom Lee, holds that the current price of Bitcoin is wrong based on a range of factors. The BTC permabull has also refused to give any further price predictions.
Bitcoin’s Fair Value Between $13,800 and $14,800
According to Tom Lee, the current market conditions for Bitcoin are wrong. Bloomberg reports that the proponent has said BTC’s fair value is between $13,800 and $14,800.
Bitcoin’s fair value, given the number of active wallet addresses, usage per account and factors influencing supply, is between $13,800 and $14,800. – Lee has said.
The analyst also added:
Fair value is significantly higher than the current price of Bitcoin. In fact, working backwards, to solve for the current price of Bitcoin, this implies crypto wallets should fall to 17 million from 50 million currently.
Commenting on the current market condition, Lee called “last year’s meteoric rally a “meltdown.” In the macroeconomic climate, treasury sales of initial coin offerings are the reasons for the divergence.
While he refused to propose any price target, Lee also outlined that should Bitcoin wallets approach a mere 7 percent of Visa’s 4.5 billion account holders, the cryptocurrency’s fair value would be $150,000 based on his model.
Grain of Salt
Lee’s statements, while optimistic, do raise a few questions. First off, while discussing Bitcoin’s current condition, the analyst refers to 50 million “crypto wallets.”
According to data from Blockchain.com, the number of Blockchain wallets is around 31.5 million. Even though this number will always increase, many of these wallets could be abandoned and it’s still nowhere near 50 million.
But Lee could indeed be proven correct in the long-term. While the price is down 85%, the number of “active wallet addresses” has only decreased by half since January’s peak, according to Bitinfocharts. While the network hash rate (i.e. network security) is still more than double what it was in January 2018 despite the recent difficulty adjustment to lower prices.
What’s more, transaction activity over the Bitcoin network could be simply decreasing as people are becoming more reluctant to spend their bitcoins at these price levels. In hopes BTC will go “to the moon” in the future (as Bitcoin’s history of market cycles shows), those who bought at higher prices are choosing to ‘hodl‘ as they are afraid of becoming Bitcoin pizza guy 2.0.
Meanwhile, Lee has previously said that Bitcoin will reach $25,000 by the end of 2018. He has since reduced his target to $15,000. This time, however, the permabull refused to give any price predictions.
“We are tired of people asking us about target prices,” he said.
What do you think of Tom Lee’s position on the current market conditions? Don’t hesitate to let us know in the comments below!
Images courtesy of Shutterstock, Bitcoinist archives