Tom Lee made an extraordinary prediction in December, one that turned out to be false. He said Bitcoin would go way back over $10,000, which was an adjustment from an earlier prediction. Now, while Bitcoin trades sideways within a tight range but altcoins are experiencing a resurgence dubbed by Mati Greenspan as “alt-season,” Lee says another bull run is on the way.
Speaking to CNBC, Lee said today:
” I think 2019′s a year about repair. We have a risk-on rally in global markets that’s positive for bitcoin; it was a headwind last year. And the dollar isn’t surging like it was last year. That’s a headwind that’s gone away.”
An increasingly powerful dollar doesn’t necessarily have an effect on Bitcoin markets in the traditional sense. In any case, there’s no strong evidence to suggest that dollar strength corresponds to Bitcoin trading. However, 2018 might have seen traders moving into forex rather than cryptocurrency.
Still, there is a staunch fact that cannot be denied: thousands of people sold at a loss throughout the crypto winter of 2018 and are still doing so. Bitcoin is as much a philosophical movement as it is an asset class.
Lee says that there are many reasons to regain faith.
“The real story is the fundamental one, that bitcoin’s becoming quite useful. We’ve seen the launch of digital currencies by not only J.P. Morgan and Mizuho Bank, but also Facebook and some social media companies gearing up. And, of course, in places like Venezuela, where bitcoin’s become very large and widely used, turmoil is causing adoption growth. So I think these are really setting up for a strong … year.”
The Mizuho Bank blockchain product, J-Coin, is not a cryptocurrency. This reporter has made the argument that JPM Coin isn’t a cryptocurrency either, being that it lacks any sort of public access, immutability, or other properties of a cryptocurrency. While J-Coin won’t even necessarily integrate a blockchain, JPM Coin might be considered a blockchain token. Jamie Dimon has also teased the idea that it might be made available for general commerce.
Lee listed other examples of reasons to be excited about Bitcoin.
“Fidelity’s launching digital custody. Bakkt is going to launch an exchange. We’ve already seen some high-profile endowments, and pension funds actually invest new money this year. So I think, as an asset class, it’s still the earliest days, but I think it’s too glib to dismiss the macro.”
The bull case for Bitcoin has always been a strong one. Let’s not get that twisted. However, the bull case for Bitcoin is a long-term one. We live in times of unprecedented national and household debt. Some countries are facing inflation rates never-before-seen. These factors, at a macro level, contribute to the bull case for Bitcoin: for individuals looking for some degree of long-term safety, Bitcoin, despite its volatility, can provide solid returns against most other assets.
It remains highly speculative nonetheless, and it’s unclear if predictions like those of Tom Lee are responsible for clearly biased outlooks. Lee got specific, saying that Bitcoin would surpass its 200-day high by August of this year.
Yet, if we judge the current bear market against the last extended one, it’ll be October before things get better. Those who bought at the top might lose as much as 85% of their investment during that time.
The old wisdom applies, however, dear reader: 1 BTC = 1 BTC. You haven’t lost anything if you don’t sell at a loss, and comparisons with traditional assets only go so far.
Tom Lee is a good cheerleader during crazy bull runs, but in times like these, it’s best to trust your gut. Fear of missing out is a murderous emotional complex. While the long-term bull case for Bitcoin is undeniably stronger than any remaining Luddite assessment, the short-term may provide better buying opportunities than seen today. Or they may not.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.