Fundstrat co-founder Tom Lee stands by his reduced year-end bitcoin price target of $15,000, saying continued fallout from a market slump in tech stocks is putting pressure on cryptocurrencies.
Lee's new prediction is a dramatic drop from the bullish $25,000 price target he had set in early-2018, when the crypto market seemed poised for a major explosion.
"Global markets have seen liquidity dry up, and bitcoin is not necessarily a value asset — so as growth stocks, tech, and FAANG come under pressure, it's going to hurt bitcoin," Lee told CNBC on November 20. "The downturn in FAANG is hurting those owning bitcoin."
Lee: Bitcoin in an 'Awkward Transition'
Despite the recent decline, Lee remains bullish about crypto because he believes we're merely undergoing an "awkward transition."
Lee said crypto still has a bright long-term future ahead because he has no doubt that institutional investors will start coming around.
Bitcoin plunged 16% Tuesday and fell as low as $4,200.22.
— CNBC (@CNBC) November 20, 2018
"The next wave of adoption is institutional," Lee said. "There is a crossover happening. This is just an awkward transition."
When asked when institutional investors will start making giant leaps into crypto, Lee said it's on the horizon.
"Institutional backing will come soon," he said. "You will get it partly through infrastructure, like Bakkt, which is launching soon. Part of it is going to come through regulatory clarity."
Regulatory Clarity Will Ease Institutional Anxiety
Lee said regulatory crackdowns on scam artists and ongoing federal investigations into bitcoin price manipulation would ultimately legitimize the industry.
"Once we have that, institutions will feel a lot more comfortable making bets [on crypto]," he said.
As CCN reported, the US Department of Justice has launched a criminal investigation into whether the crypto market's meteoric price rise in 2017 was manipulated using tether.
In June 2018, a University of Texas finance professor published a damning research paper claiming that at least 50 percent of the increase in the bitcoin price in 2017 was artificially manipulated using tether.
US Justice Department Probes Tether for Bitcoin Price Manipulation: Report https://t.co/NSYQuIkIhf
— CCN Markets (@CCNMarkets) November 20, 2018
Tom Lee said regulatory scrutiny of crypto scams would benefit the industry by easing consumer and institutional anxiety about the burgeoning industry.
Besides, Lee said, you can't stop the future — and the future is definitely digital.
"Digital assets are going to be relevant in a world where growth is increasingly digital," Lee said. "So bitcoin is a real bet on [the future]."
Tom Lee: Chill out, Crypto is the Future
Lee also pointed out that bitcoin's market penetration is gradually increasing. "It's clearing more on-chain transactions relative to PayPal by a factor of three," he said. "So today, bitcoin is more used to move money than PayPal."
As for naysayers who say crypto is dead because it's in a slump right now, Lee said don't bet on it.
"Do I think bitcoin as a long-term fundamental story is broken? I don't think so," Lee said. "Price at the moment isn't confirming fundamentals."
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Last modified (UTC): November 20, 2018 6:50 PM