Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
Tom Lee, the managing partner of Fundstrat Global Advisors, has made an ambitious prediction for Bitcoin (BTC), stating that it could experience a substantial rally within the next five years. So, why is Lee so confident in this jaw-dropping projection? Let’s explore.
In a recent CNBC interview, Lee suggests that Bitcoin’s price could surge by over 500% from its current level, reaching approximately $200,000.
Lee argues that Bitcoin’s value lies in its usefulness, and he believes that the financial system, particularly in the US, works well for those who already possess wealth. However, on the other hand, he also sees significant potential for Bitcoin to offer financial benefits to a broader range of individuals.
He rightfully noted, one crucial factor that is being underestimated is the impact of a spot Bitcoin exchange-traded fund (ETF) receiving authorization in the US. He suggests that such approval could have a significant effect on Bitcoin’s market cap.
According to his analysis, the multiplier effect could be as high as four-to-one, meaning that every dollar of inflow into the ETF could lead to a $4 change in Bitcoin’s market cap. In other words, a demand for $100 billion or $200 billion through the ETF could potentially translate to an $800 billion increase in Bitcoin’s market cap.
“(If you don’t get an ETF) then you’re going to rely on sort of organic network effects.”
Moving ahead, Lee emphasizes the importance of the potential Bitcoin ETF as another catalyst for further growth. But, he also acknowledges that if the spot Bitcoin ETF applications are rejected in the US, the cryptocurrency will still rely on its organic network effects for expansion.
Despite the uncertain outcome of ETF approval, the analyst remains bullish that the authorization of a Bitcoin ETF is likely, and he concludes that it will be a crucial and underestimated catalyst for the cryptocurrency’s future performance.
As of the current moment, Bitcoin is trading at $29,982. It’s important to note that predictions for cryptocurrency prices are inherently speculative and subject to various market factors and regulatory developments.