Even those who do not follow Bitcoin or Crypto are aware that 2018 has seen Crypto prices decline exponentially.
2017 saw Bitcoin’s price climb to $20,000, and if you follow our post’s, you would have seen that we predicted 2018 would be a tough year for Crypto. We stated that it was only a matter of time before governments and regulators stepped into this space. Almost a year ago to the day (14 December 2017) we posted the following:
We know the hype on Cryptocurrencies has been great of late, more and more investors are jumping in. New investors are opting against the traditional stocks and shares investments and jumping onto the Crypto market due to the high gains they are seeing. We have been following the Crypto market for a long time and although we are not investment advisors, and our site is not intended to be used as such, we will urge caution as we have seen major corrections take place in the past. It is not uncommon to see a drop in value of 50% or even more in one day!
Even though we expected to see a drop in prices, we could not have predicted a bear market to this extent. Is Bitcoin however undervalued at its current price? Tom Lee (head of research at Fundstrat Global Advisors and Wall Street trader) seems to think so. In a note written by Lee (as reported by Bloomberg), he claims that Bitcoin’s fair value is between $13,800 and $14,800.
“Fair value is significantly higher than the current price of Bitcoin,” he wrote. “In fact, working backwards, to solve for the current price of Bitcoin, this implies crypto wallets should fall to 17 million from 50 million currently.”
You may be of the view that Lee is simply plucking figures out of the air. I like to think he is more calculated than that. Lee is not just a random Youtuber or blog writer (as myself). Lee is an accomplished Wall Street strategist, and former chief equity strategist at J.P Morgan before co-founding Fundstrat.
So while many Crypto holders out there may be dismayed by this year’s continuous bear market, 2019 may see Bitcoin’s price return to 2017 levels…possibly even higher (if Lee’s predictions are correct).
So why is bitcoin ‘undervalued?’
There are many reasons why we have seen such a big drop in Bitcoin’s price over the last year including the following:
- Strict Regulation and rumours of Crypto bans
- Investors fearing that the market could crash
- The likes of Jamie Dimon calling Bitcoin a ‘fraud’
- Exchanges being hacked
- The recent hash war within the Bitcoin Cash (BCH) community
- The general public’s lack of understanding on the Crypto/Blockchain technology
- Slow Crypto adoption (particularly Bitcoin)
We are of the view that Bitcoin and Cryptos in general are here to stay, we believe that 2019 will be a much better year for the Crypto world and we shall post our reasons why shortly.
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We are not investment or financial advisors and are here to provide news and our opinions. Please be fully informed regarding the risks and costs associated with trading the financial markets and the Cryptocurrency market, it is one of the riskiest investment forms possible.