Bitcoin investors hoping for a repeat of 2017’s huge gains have been disappointed up to this point in 2018, as prices have tumbled more than 50 percent year-to-date. However, one of the biggest bitcoin bulls on Wall Street isn’t yet giving up on his bold prediction that bitcoin prices could finish the year at an all-time high.
Bitcoin prices initially dipped on Thursday after CNBC reported that Fundstrat Global Research analyst Tom Lee dialed back his year-end bitcoin price target from $25,000 to $20,000.
“Bitcoin has historically traded at 2.5 times its mining costs,” Lee said on CNBC on Thursday morning. “It’s not out of the question that it could be over $20,000 by the end of the year at fair value.”
Although a potential 20 percent reduction in price target is noteworthy, bitcoin prices would still need to triple over the next six months to reach $20,000.
On Thursday afternoon, Lee clarified in an interview with MarketWatch that his earlier comments don’t actually mean he is abandoning his $25,000 target for bitcoin just yet.
As for bitcoin’s 2018 sell-off, Lee said the market is simply digesting its huge 2017 gains.
“It’s just a malaise,” he said. “It also has to work off its parabolic move from last year.”
In the past, Lee has pointed out that bitcoin has typically produced huge gains in short, volatile bursts, and long-term investors can’t afford to miss out on those brief rallies. Lee says investors have historically been able to capture all of bitcoin’s annual gains simply by holding the stock on its 10 best days of the year.
In the longer-term, Lee says bitcoin prices will continue their upward trajectory once the cryptocurrency market matures. More regulations will help ensure investor safety, encouraging large institutional buyers to enter the market and drive prices higher.
However, while Lee is maintaining his rosy outlook, there are plenty of critics out there who say the 2018 sell-off is just the beginning of a bursting bubble.
Vanguard economist Joe Davis says the real value in bitcoin is its underlying blockchain technology, not the actual currency.
“I’m…
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