- November 21, 2018
- Posted by: Melinda Sellers
- Category: Bitcoin
According to a report, Tom Lee has slashed Wall Street’s best-known cryptocurrency bitcoin price target nearly in half.
Tom Lee, co-founder of Fundstrat Global Advisors, lowered his year-end target to $15,000 from $25,000. Even after this price slash, they were still above from where the cryptocurrency was trading on Friday.
A key driver was bitcoin’s “break-even” point, the level at which mining costs match the trading price. According to Fundstrat’s data science team, that level is down to $7,000 from an earlier estimate of $8,000 for the S9 mining machine by Bitmain. On the basis of that, Lee estimates that fair value for bitcoin would be roughly 2.2 times the new $7,000 break- even price.
According to a data from CoinDesk, Bitcoin is trading that near $5,539 on Friday. This week , Bitcoin hit its lowest level of the year while the majority of major cryptocurrencies saw double-digit downward swings.
On Friday, Lee told clients that he is very optimistic about the recovery. He said that it “never sustained a move below ‘breakeven”, even in the depths of a previous bitcoin bear market between 13 and 15.
J.P. Morgan’s former chief equity Lee said that “they believe that the negative swing in sentiment is much worse than the fundamental implications.” With bitcoin breaking below that psychologically important mark of $6,000, this has lead to a renewed wave of pessimism.
Mr. Lee said that price movement was driven by “crypto specific” events including the contentious argument over bitcoin cash. This week ,the cryptocurrency community sparred on Twitter over what’s known as a “hard fork” of bitcoin cash. The digital currency split into two versions- Bitcoin SV, “short for “Satoshi’s Vision” and “Bitcoin ABC” or core Bitcoin cash. After a disagreement on the best way to scale a digital currency , Bitcoin cash itself is a result of a fork from bitcoin.
The cryptocurrency traded comfortably in the $6,400 range before falling off a cliff on Wednesday. For much of October, bitcoin seemed immune to sell-off in global financial markets.
Mr. Lee feels that the launch of ICE, Starbucks and Microsoft- backed Bakkt and Fidelity entering the market is “part of a broader creation of infrastructure necessary for institutional involvement. Still he is bullish on more institutional involvement bolstering prices into the end of this year.