Tom Lee Says This Investment Trust Could Soar Alongside Bitcoin

By CCN Markets: With all of the crypto attention currently centered on Facebook’s Libra cryptocurrency, bitcoin could be gearing up for its best run to date. Fundstrat Co-Founder Thomas Lee believes that it is headed much higher in the near future, predicting that a fear-of-missing-out, or FOMO, will catapult the bitcoin price to $40,000 sooner than later.

According to a Bloomberg report, Fundstrat’s latest report suggests that a higher bitcoin price is being supported by “market transparency and integrity.” In turn, a rising BTC price is expected to fuel gains in the Grayscale Bitcoin Trust (GBTC), which “tracks bitcoin’s market price” and boasts more than $2 billion in AUM as of June 17.

grayscale bitcoin trust tracking bitcoin
GBTC tracks the price of BTC. | Source: Bloomberg

Fundstrat’s Lee expects that FOMO could set in once bitcoin crosses the $10,000 level once again, which will fuel higher returns in GBTC. According to the Fundstrat note cited in Bloomberg:

“Bottom line: Crypto winter looks over. Investors need to overweight bitcoin. And a good way to gain exposure is via GBTC.”

 

Tom Lee tweet
Bitcoin bull Tom Lee expects GBTC to rise.| Source: Twitter

Facebook’s Crypto a ‘Gateway to Bitcoin’

Grayscale’s GBTC currently trades at $11.66 in the OTC market. Lee points to the GBTC’s “NAV premium because of scarcity.” The trust, which touched on $12 this week, is trading at summer 2018 levels, having benefitted from the rising popularity of crypto thanks to Facebook and other catalysts. Crypto market leaders are largely bullish on Facebook’s new Libra coin. Travis Kling of Ikigai told Bloomberg that rather than compete with the flagship cryptocurrency, Libra is likely to be a “gateway” for some “2.5 billion monthly active users…to bitcoin.”

Facebook isn’t the only one “pushing crypto adoption,” as pointed out by Binance CEO Changpeng Zhao.

cz tweet
Facebook isn’t the only one “pushing crypto adoption.” | Source: Twitter

Institutional Capital Being Unlocked

Meanwhile, As CCN previously reported, Fundstrat’s Lee believes once the bitcoin price hits $10,000, FOMO will catapult it to $20,000 in short order followed by a “run to $40,000 within five months.” That price range attaches a “NAV premium of 20% to 60%,” which would position the GBTC price in a range of nearly $30 to more than $60. According to Fundstrat’s Lee cited in Bloomberg:

“This is substantial upside and suggests it is a good way to get Bitcoin exposure.”

Grayscale aims to make it easier for investors to gain exposure to bitcoin, with nearly three-quarters of their demand stemming from institutional investors including hedge funds as of Q1 2019. Most of the firm’s capital inflows are directed toward the bitcoin trust, which could be a function of the May 2020 halvening event that is expected to drive the BTC price higher.

Last modified (UTC): June 20, 2019 9:58 PM

About the author

Gerelyn Terzo
Gerelyn Terzo

Gerelyn is Assistant Editor at CCN. Based in the U.S., she has also covered institutional investing on Wall Street but caught the bitcoin bug soon after. She resides 13 miles outside of New York, close enough but also far enough away to escape it all. Follower her on Twitter (@cryptogerelyn) or email [email protected]