Despite Struggle, Bitcoin predicted to reach high of $20K: Tom Lee
Tom Lee, the founder of the Market Research and Strategy company Fundstrat and known for the optimism he espouses in the Bitcoin market, has suggested that 2018 will be very positive for Bitcoin and it will reach a high of $20,000.
Bitcoin, being the differentiated financial product that it is, has not followed the same path as the other traditional products like gold, there seems to be no parallel between the two, said Tom Lee in an interview with CNBC.
The primary topic of discussion was the ETFs from emerging markets like the iShares MSCI Emerging Markets Index ETF, enabling prospective investors to diversify their portfolio in other developing markets.
In light of the same, Lee said, “Both really essentially peaked early this year, and they both have been in a downward trend. Until emerging markets begin to turn, I think in some ways that correlation is going to hold and tell us that sort of the risk on mentality is those buyers aren’t buying bitcoin.”
Citing his earlier analogy of correlation between products and the emerging markets ETFs, Lee mentioned that the rise in said markets will have a positive effect on Bitcoin, making the latter rise, given the parallel between the two since late 2017.
Other international factors are also at play here, given the economic conflict between the United States, Turkey, Iran and China, the value of the US dollar could decline, this combined with the June 2018 increase in the Federal Reserve Rate (a few more expected by the end of the year) will lead to a fall in currency and an increase in bitcoin, Lee explained:
“So why do we think they’re connected? Well, there is two factors. The first is hedge funds – see hedge funds typically rent emerging market stocks. So, they do risk-on, risk off. So, when they’re risk-off, Bitcoin also suffers because they are risk off. The second reason has to do with wealth effect. Wealth effect means that if you are living in an emerging market, and you see your stock market fall hugely, that you will have a lot less money to buy Bitcoin.”
Due to the conflict between the United States and Iran, along with other countries, Germany took a firm stance and officially proposed the establishment of a global financial system outside the purview of the US.
The German-Finnish entrepreneur and political activist, Kim Dotcom, said that since the announcement by Germany is the first call for an independent financial system in Europe, if Germany and the other states pursue this, the US dollar value will drop, and, relatively, the price of Bitcoin will rise.
Combining all these factors, the rise of the emerging markets, the shift in the global economic system, the depreciation of the dollar, Lee considers the price of Bitcoin is due for a tremendous increase by the close of the year.
Image source: Shutterstock
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