Tom Lee, Bitmine Chairman and Fundstrat’s lead researcher, highlighted the four-year price cycle in crypto. In an interview with Mario Nawfal, he connected the origin of the cycle with Bitcoin’s price-halving function, which in the earlier days produced regular supply shocks.
In the early decentralized period, price was the only reliable signal, and it established a rhythm of giant upswings and sharp drawdowns.
2024, however, was a turning point. Institutional investors first surpassed retail traders as the force driving Bitcoin markets. Their longer-term strategies and larger inflows could dampen volatility and reverse the trend on which many traders were reliant.
Lee added that the coming year would put a test on whether Bitcoin continues along a classical decline or triggers a break from a correlation with equity markets.
Lee’s introduction into crypto was in 2017, as he left JP Morgan in order to found Fundstrat. Then, his argument compared Bitcoin to digital gold, something that was overlooked all along Wall Street.
His initial predictions calculated Bitcoin’s fair value as $25,000, and it was selling for less than $1,000. The prediction was called into question and even lost Fundstrat customers, but by 2022, Bitcoin was in that range.
Once speculative, it is now widely adopted. Institutions, governments, and corporate treasuries are directly investing in digital assets. This development, Lee argued, introduces counter-cyclical behavior, making previous models less reliable and solidifying the case in support of a new supercycle.
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In the future, Lee targeted ambitious forecasts: Ethereum up to $60,000 and Bitcoin up to nearly $1 million. He stood by his targets, supported by both cycles in liquidity as well as institutional support and government support. Unlike prior cycles that relied on speculative retail, the current wave is supported by larger structural demand.
Some say, though, that crypto markets remain dependent on liquidity. Charts of Bitcoin relative to global central bank policy are significantly dependent on quantitative easing and low rates. But Lee believes innovations in AI, stablecoins, and the implementation of blockchain can drive adoption despite a more stringent monetary policy.
At a broad level, the world economy faces more than $600 trillion in pension, corporate, and government debt. Opinion is divided as to whether it leads to deflation or causes hyperinflation.
Lee suggested that innovation in AI, crypto adoption, and electronic currencies is a potential source of stability. Stablecoins, by way of example, now buy U.S. Treasuries at levels comparable to Japan or China, indirectly driving financial markets.
Future central bank digital currencies might take it a step further and allow policymakers to make direct digital transfers instead of rate changes. In that reality, crypto could progress from a speculative asset to a staple on the world financial horizon.
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