Managing Partner and Head of Research at Fundstrat Global Advisors, Tom Lee, recently made an appearance on CNBC‘s ‘Street Signs Asia‘ segment to talk about Bitcoin price movements in the future. Lee also spoke about why he thinks Bitcoin will touch $25K by 2022.
According to Lee, for an industry that’s over a decade old, these are still early days for digital assets. However, as time passes, it will become very institutional, he said. Fundstrat’s Lee added,
“Over time, it’s going to become an asset class, and once we hit that it’s actually another hockey stick.”
When asked about his prediction for the king coin’s price, Lee said that it had been established back in 2017 as a five-year prediction. According to him, the predicted goal would be easy to achieve due to cryptocurrencies being network value assets — the more people that hold it, the greater its value.
“In fact, it’s a log function, so if you double the users you get a quadrupling of value, and to go to $25,000 you essentially need a 4x rise (a little bit less than that) which means you need to double the number of people who hold Bitcoin.”
According to Lee’s estimates, there are under half a million people in the world who own and use Bitcoin widely today. He also compared Bitcoin to Internet stocks such as FAANG and attributed 70% of their returns since the IPOs to the growth of the Internet over that period of time.
“So in other words, it was a log function of the Internet growth, and that’s how cryptocurrencies are going to work. That’s just saying if you take it to a million users, you could get to $25,000.”
Bitcoin hodling reports higher returns than DeFi schemes
Bitcoin had its hands full dealing with the bearish market, while DeFi gained popularity and provided significant earnings in mainstream finance. However, according to the report provided by Token Analyst, hodling Bitcoin [BTC] or Ethereum [ETH] garnered more revenue compared to crypto lending.
The report highlighted the difference in returns offered by investing $1,000 at the beginning of 2019 in crypto and crypto lendings. The first example of hodling was:
“if you put $1000 into BTC on Jan 2019 and held until July 2019, you would have had a 211% return on investment!”
The 211% return on investment was higher than the returns incurred by becoming a liquidity provider on dY/dX or CompoundV2 that provide returns in the form of interest accrued. According to Token Analyst, if a user invested a sum of $1000 in Uniswap and compounded up until July 2019, they will receive a return of merely 11%. The scenario was not very distinct if the users would have invested in dY/dX or CompoundV2.
However, the report noted that “risk” adjusted results might reflect a different picture, due to relatively less volatile results promised by DeFi yield. According to DeFi schemes noted a boost recently as it managed to hold $650 million.
“There is now over 650 million (USD) locked in #DeFi. ”
Apart from yields, the report highlighted Binance and Kraken have both increased share ~10% since 2017, with Huobi maintaining its lead. The move towards OTC trades has gained momentum in 2019.
The report also noted that only 3% of BTC mined in 2019 was sold directly on exchanges, while Over The Counter [OTC] trades took over.