As bitcoin entered the second half of 2018, trading below the $7,000 mark, a leading Wall Street analyst has come out to say that he stands by an earlier forecast of his in which he declared that the world’s largest cryptocurrency would go on to sell for $25,000 by the end of the year.
Fundstrat Global Advisors co-founder Tom Lee said on Thursday afternoon that he expects the price of bitcoin to climb just beyond its December 2017 record high of $20,000 in a matter of months.
“Bitcoin has historically traded at 2.5 times its mining costs. It’s not out of the question that it could be over $20,000 by the end of the year at fair value,” Lee told CNBC in an interview.
Lee, is one of a few Wall Street analysts who constantly weigh-in on the price of bitcoin. And his comments sparked reports that he had downgraded his earlier forecast that bitcoin would sell for $25,000 by the end of the 2018.
According to Lee, his comments had been wrongly interpreted by many media outlets, requiring him to clarify his position later on Thursday evening when he told CNBC’s Fast Money that he still stands by his $25,000 forecast and “may have misspoke a little bit.”
Lee explained that his price analysis was based on the rising cost of mining bitcoin due to its high energy demands and increasingly difficult calculations needed to create the digital currency.
“The reason bitcoin looks really good here is the cost of mining around $7,000 fully loaded. And the difficulty is rising. So by the end of the year, it’s going to be $9,000.”
Lee said those mining costs estimates “imply fair value over $20,000, roughly $22,000.” Adding that, “We still think bitcoin can reach $25,000 by the end of the year or something like that.”
With over 25 years of experience in equity research and Wall Street trading, Lee is one of the most respected blockchain analysts. He was the Chief Equity Strategist of J.P. Morgan from 2007 to 2014. His expertise includes Market Strategy and Telecom Services.
He says he believes that the blockchain technology is a “multidecade story” that’s in the “early stages” of transformation.
“I did wireless [research] in the 1990s. I saw 20 years of mobile and internet convergence. To me, this is not that different” in terms of how an industry has change over time, he said.