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Bitcoin Price Crash is Burning Man’s Fault & Fed Will Cut Rates 3x: Tom Lee

Last Updated March 4, 2021 2:39 PM
Samantha Chang
Last Updated March 4, 2021 2:39 PM

Fundstrat co-founder Tom Lee claims the bitcoin price nosedived this week because the crypto-sphere is distracted by the Burning Man festival. Moreover, Lee predicts the Federal Reserve will cut interest rates 75 basis points by the spring of 2020.

Lee, a bitcoin perma-bull, made the remarks to Fox Business News . During a segment with UBS Managing Director Jason Katz, Lee discussed bitcoin, the stock market, and Federal Reserve policy.

“In a week like this, when there’s Burning Man happening and Labor Day, there aren’t a lot of inflows into bitcoin,” Lee remarked.

bitcoin price chart
Bitcoin fluctuated wildly this week, in tandem with erratic volume spikes.  | Source: WorldCoinIndex

Burning Man is a nine-day annual festival (Aug. 25 to Sept. 2) that takes place in the Black Rock Desert of Nevada. It’s like a modern-day Woodstock, where people gather to celebrate art and radical self-expression.

About 70,000 people attended the event in 2017. A similar-sized crowd is attending this year. It’s doubtful that many of them are crypto investors.

Tom Lee: Bitcoin is suffering from ‘trendless markets’

It’s unclear why Lee — who’s not even attending Burning Man — thinks the hippie carnival would impact the crypto market. But OK, since that’s as likely an explanation for the latest bitcoin price plunge as anything else.

Lee added that bitcoin is also suffering from “trendless markets.” Basically, he’s saying that bitcoin investors aren’t sure whether to buy or sell because there’s uncertainty in the equity markets.

“You need markets to either break out or break down before people decide incrementally if they want to own bitcoin. At the moment, when stocks have no trend and interest rates aren’t really clear, there’s really no macro direction.”

UBS director: ‘Blockchain is here to stay’

UBS Managing Director Jason Katz is not a bitcoin fan. However, he believes that “blockchain is here to stay.”

That said, Katz insists gold is a better store of value during financial turmoil and geopolitical uncertainty than bitcoin is.

Katz noted that the stock market is “very skittish and headline-driven” right now because a single tweet from President Donald Trump could send the Dow shooting up or crashing down. Like other investment bankers, Katz believes “this market just wants to go up.”

He’s also cautiously optimistic that the China-US trade dispute will be resolved sooner rather than later. However, it’s going be a bumpy road.

“This trade negotiation is going to go to the 11th hour,” Katz predicts.

Lee predicts Fed will cut rates three times

Fundstrat’s Tom Lee agrees. Lee also believes the Dow wants to go up.

He noted that there was a “crescendo of fear” last week concerning the inverted yield curve and the US-China trade war which fomented recession hysteria. Now, Lee says, “calmer heads are prevailing,” so the Dow has stabilized somewhat to the upside.

Before becoming a bitcoin shill, Lee was an equity strategist at JP Morgan and a managing director at Salomon Smith Barney. So he has experience analyzing the stock market.

Looking ahead, Lee predicts the Federal Reserve will cut interest rates three times by the spring of 2020. In total, Lee projects the Fed will cut 75 basis points — above the Wall Street consensus of 50 points.

As CCN.com reported, the Fed hiked interest rates seven times during Trump’s two-and-a-half year presidency. It boosted them four times in 2018 alone. In contrast, the Federal Reserve raised rates just once during Barack Obama’s entire eight-year presidency.

The most recent rate hike in December 2018 caused the stock market to tank amid press-hyped fears of an imminent recession. However, Tom Lee and other financial experts believe the Fed will try to reverse some of the damage it caused by raising rates so often in 2018.

“It’s good for the market to cut rates,” Lee said. “Market participants are actually looking for that.”