By
Chimamanda U. Martha
April 26th, 2024
Despite Lee’s positive outlook for Bitcoin, not all analysts share his unbridled optimism.
With Bitcoin (BTC) trading around $51,000 over the past few days, Tom Lee, the head of research at Fundstrat Global Advisors, believes the crypto asset could hit $150,000 this year, citing several factors driving the outlook.
In a recent interview with CNBC, Lee pointed to the increasing demand for Bitcoin, fueled in part by the introduction of new ETFs in the market, as one of the factors that could drive the asset’s price to a new all-time high.
Bitcoin Spot ETFs
Recall that the US Securities and Exchange Commission (SEC) approved 11 new Bitcoin spot ETFs on January 10. These investment vehicles, owned by some of the world’s largest asset managers like Grayscale Investments, Fidelity, and BlackRock, have attracted many institutional traders into the crypto market, recording a combined inflow of $2.4 billion every week.
Lee believes the recent ETF noise will propel Bitcoin to reach a remarkable feat. The senior researcher and managing partner at Fundstrat is optimistic that the crypto asset could record a new all-time high above the previous mark of nearly $70,000 for the first time since its creation in 2009.
“I think it could be as high as $150,000 this year,” he said.
In addition to the ETFs, the senior researcher and managing partner at Fundstrat said that another factor that could potentially drive Bitcoin’s future performance to a new height is supply constraints due to halving, which ultimately reduces the rate at which new BTCs are created.
Additionally, Lee mentioned the potential easing of monetary policy, which could benefit risk assets like Bitcoin, as one of the factors that could influence its future performance to achieve the predicted outcome.
“Because you’ve got demand improving with the [spot bitcoin exchange-traded fund] ETF, and you have the supply shrinking with the halving, and if monetary policy eases, which we expect, that’s supportive for risk assets and bitcoin’s holding up. I don’t think the drawdown is going to start that soon,” he told CNBC on Wednesday.
Lee Predicts Bitcoin to Reach $500,000 in Five Years
Lee’s recent prediction aligns with his long-term outlook, where he sees Bitcoin reaching $500,000 over five years. He previously predicted that Bitcoin’s quality as “sound money” would drive the crypto asset to reach half a million dollars due to its security and utility as a store of value and risk asset.
The leading crypto asset with a market capitalization of over $1 trillion reached $53 000 on February 20, 2024, for the first time since the last bull run in 2021.
The new all-time high of 2024 lasted shortly before retracing back to $50,000 on some crypto exchanges, including Binance. As of February 22, Bitcoin is trading at $51,580, with a 0.49% drop over the last 24 hours, according to CoinMarketCap data.
Market Analysts Caution Short-Term Investors
Despite Lee’s positive outlook for Bitcoin, not all analysts share his unbridled optimism. Joel Kruger, a market strategist at LMAX Group, urged short-term traders to be cautious of the risks associated with cryptocurrencies, citing potential volatility due to shifting central bank policies and global macro weakness.
Kruger suggested that any downturn in BTC value could present an opportunity for strategic investors to buy in.
Swissblock, an analytics firm, also shared the same sentiments as Kruger. The firm said there could be a potential pullback in BTC prices before the crypto asset resumes its uptrend trajectory.
Despite short-term uncertainties, the company maintained a bullish long-term outlook for Bitcoin, highlighting its potential for higher prices in the future.
“While the prevailing sentiment suggests a potential continuation of the upward trajectory, the current scenario may necessitate a period of consolidation or even a retracement to the $47.5k support level,” Swissblock analysts said.
