Bitcoin bull and and Fundstrat co-founder Tom Lee is still holding fast to his most notable prediction — Bitcoin will hit $25,000 by the end of this year.
If realized, this prediction would mean Bitcoin rockets past even the highs that it achieved in 2017.
Lee cites three main factors that he believes support his $25,000 Bitcoin target.
The first factor comes in the form of BTC production and replication costs. Lee said that Bitcoin was “trading at cost.”
This means that Bitcoin’s price of production — what it costs to make a new Bitcoin by mining it — is close to the trading price.
According to Lee, the cost of production for a Bitcoin is around $6,000, which depends a lot on the cost of electricity wherever the coin is mined.
This $6,000 number would mean that Bitcoin is still worth more than its mining cost, but just barely. Bitcoin recently traded at $7,600.
The second factor that may propel Bitcoin to $25,000 is institutional investors who, while interested in the ever-growing field of cryptocurrency, have not yet invested in a major way to due regulatory concerns.
“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because there is still some regulatory uncertainty, ” he said.
“But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why Bitcoin rallies.”
The third factor, according to Lee, concerns his top 10 day theory.
Lee’s top-10 day theory states that, historically, all of Bitcoin’s annual gains are achieved on the best 10 trading days of the year.
“Historically, 10 days comprise all the performance in any single year of Bitcoin’s price,” he said.
“If you just took out those 10 days, Bitcoin’s down 25 percent a year.”
“So as miserable as it feels holding Bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days.”
A recent drop in value saw Bitcoin lose most of the gains made from mid-April to early May.
Despite these recent drops, Fundstrat predicts a bright future for Bitcoin.
These predictions go even beyond the $25,000 that Lee has targeted by the end of 2018. Fundstrat Global Advisors believes Bitcoin will hit $36,000 by the end of 2019.
The fund’s research is based on historical averages.
Furthermore, analysis of the relation between Bitcoin mining costs and price has led other analysts to predict the cryptocurrency’s range to be between $20,000 and $64,000 by the end of 2019.