Why Bitcoin bull Tom Lee predicts a new all-time high

Fundstrat analyst Tom Lee's Bitcoin price predictions (CNBC)
Fundstrat analyst Tom Lee's Bitcoin price predictions (CNBC)

Bitcoin bull Tom Lee says the crypto winter is over and has outlined what it will take for the Bitcoin price to new all-time highs.

Bitcoin topped US$8200 yesterday, marking the first time it has done so since July 2018. That, coupled with the cryptocurrency’s more than 90% growth since the beginning of April has led many to believe that the “crypto winter” is over – a sentiment which Lee shares.

Lee, who is the head of research at advisory firm Fundstrat, pointed out that Bitcoin crossed above its 200-day moving average back in April – one of the items on the company’s 13-point checklist of signs that the crypto winter is now over.

Lee also believes that Consensus 2019, which began on May 13th, will be a key factor in determining whether the recent rally was merely a one-off or if the market has truly turned a corner.

The New York event is the largest annual cryptocurrency conference in the world and brings together industry leaders, experts, government officials, and enthusiasts from around the world.

“I think that, really, this year is bringing the crypto industry together, but in a much more higher-quality form because you don’t have as many sort of scams and ICOs out there,” Lee said.

Where will Bitcoin go from here?

An eternally optimistic proponent of Bitcoin, Lee is confident that all of the factors are falling into place to push the cryptocurrency to a new all-time high.

He mentions four specific factors that he believes will contribute to another bull run:

  • Trade tensions between the US and China
  • Positive developments in the industry
  • The $10,000 ‘sweet spot’
  • Bitcoin’s upcoming ‘halvening’ event

Trade tensions between the US and China

The escalation of the US-China trade war could very well be a contributing factor to the Bitcoin rally and its continued climb, as Lee said, “The tensions with US and China, I think, have really sort of sparked this potential risk of some sort of systematic meltdown and crypto is uncorrelated.”

Though he stopped short of calling it a “safe haven,” Lee noted that investors may begin to see Bitcoin as “digital gold” that they can use as a hedge against tail risk.

“I think its going to be an asset that will look attractive in the event of a tail risk event [like] loss of faith in central banks – I mean that’s really sort of the original reason that cryptocurrencies were developed – and that spectrum of deep, deep risk-off I think Bitcoin is going to act like digital gold,” he explained.

Positive developments in the crypto industry

Positive developments in the industry

Two extremely positive developments to emerge from Consensus are Bakkt announcing initial tests of its Bitcoin futures trading in early July and major retailers agreeing to accept crypto as payments.

Bakkt will offer a daily settlement Bitcoin future as well as a monthly Bitcoin futures contract, and Bakkt will also contribute US$35 million into the clearinghouse risk waterfall.

The futures products will be regulated by the CFTC, and Bakkt is working on becoming a trust company that will operate as a qualified custodian for digital assets with help from the New York State Department of Financial Services.

As for greater retailer adoption, Flexa announced the launch of their SPEDN app, which allows users to easily spend cryptocurrency at over 30,000 retailers.

Flexa partnered with the Gemini exchange to create the app that can be scanned at point-of-sale terminals just like Apple Pay or other digital wallets.

Users can use the app to spend Bitcoin, Bitcoin Cash, Ethereum, or the Gemini Dollar at some of the largest retailers in the United States, including Lowes, Barnes & Noble, Office Depot, Whole Foods, and GameStop.

Bitcoin price

The $10,000 “sweet spot”

With prices inching back toward $10,000, traditional investors are beginning to view Bitcoin in a new light.

“I think what’s getting investors quite optimistic is that now that bitcoin is approaching that $10,000 level, I think that there’s an increasing chance that traditional, non-crypto investors, traditional financial investors, are going to start to look at crypto again,” Lee said.

“And that’s very important, obviously,” he added, “because bringing in that new sort of interest and demand into crypto could really push bitcoin to its all-time high.”

Bitcoin’s upcoming ‘halvening’ event

In May of 2020 Bitcoin will undergo its third ‘halvening’. This is an event where the network cuts the block reward in half – from 12.5 BTC to just 6.25 BTC.

Historically, Bitcoin prices start to rally roughly a year before each event as the anticipation of decreased supply results in increased demand.

Bitcoin 'halvening' price trend
Bitcoin ‘halvening’ price trend (TradingView)

At press time Bitcoin is trading at $8,159.53 – a gain of nearly 4% over the past twenty-four hours.

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