Thomas Lee, Fundstrat Global Strategy managing partner, thinks global geopolitical tensions and trade war related market uncertainties are at the root of the bitcoin breakout in play since April.
The bitcoin halvening of block rewards looming next year is also a key driver behind the price rise in his view.
In an interview with Yahoo Finance focused on the equity markets, upon which Lee is much less pessimistic than many others about the negative impact of the US/China trade war, bitcoin came up as part of the “flight to safety” story.
With bitcoin currently trading at $7,945’s finds overhead resistance at $8,000, Lee thinks the price should be a lot higher.
JPMorgan thinks is trading way above intrinsic value but Thomas Lee doesn’t agree.
Bitcoin at $14,000
Lee is seeing fair value for Bitcoin at around $14,000.
Lee does expect “risk premium to go up but on the other hand the credit markets is actually behaving a lot better… credit markets are acting though this [trade war] this will be a transitory impact.”
He continued: “Unlike last year we do have central banks that are willing to act, downside risk is much different.”
“Bitcoin has been really instructive this year. historically in periods when people have been worried about markets or macro risks or policy or geopolitical we’ve seen bitcoin rally, so it’s actually working like digital gold. But there a couple of catalysts coming,” says Lee.
“There’s the halvening when the block rewards get cut in half which is exactly one year from today and bitcoin has historically staged a pretty big rally into the halvening because you’re really cutting supply so $9 million a day today is sold by miners – it’s going to drop to four and a half million on the mining day.”
“It’s easy for the market absorb three and a a half million so bitcoin should drift up dramatically.”
“If you look at break even, bitcoin price to breakeven should be a around $14,000 now so I think that’s why we’ve had this big rally,” Lee concludes.
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane