Are cryptocurrencies speculative? Double-digit price movements indicate volatility. However, Lee believes that cryptocurrencies are not speculative. SEC Chairman Gensler, in his statements at every opportunity, says that cryptocurrencies are only at the beginning of the path and that they are taking careful steps so that citizens do not become victims. Let’s look at the subject from Tom Lee’s window.
Tom Lee, Cryptocurrency Explanation
Tom Lee of Fundstrat says that, unlike most analysts, cryptocurrencies are actually not speculative enough. Although cryptocurrencies are often criticized for attracting speculators, Tom Lee of Fundstrat Global Advisors believes that this is not the case.
Fundstrat estimates that oil is traded 31 times on speculation, meaning that each barrel of oil is traded 31 times before it is actually used by refineries. On the other hand, in cryptocurrencies, he speculates two and a half times on a coin/token. As for the US dollar, the level of speculation is currently 96 to 1.
Judging by these statistics, Lee concludes that the level of cryptocurrency speculation is relatively low.
Cryptocurrencies and Volatility
Lee expects Bitcoin’s volatility to decrease significantly in the coming years as its market capitalization continues to grow. Drawing parallels between the largest cryptocurrency and gold, Lee says that as soon as gold reached a market capitalization of $10 trillion, its volatility plummeted.
The market capitalization of Bitcoin is still only a small fraction of the market capitalization of gold, but industry leaders such as Galaxy Digital CEO Mike Novogratz believe that the flagship cryptocurrency can become a leading means of saving in the coming years. In February, Lee predicted that the price of bitcoin could rise to $200,000, arguing that a lot of speculative capital could flow into the cryptocurrency.
Last year, the Fundstrat boss also said bitcoin could reach $125,000, but bitcoin has only gone up to $69,000. Lee is no stranger to unsuccessful bitcoin price forecasts. In 2018, he claimed that the price would reach $25,000 before a major correction. Many of us remember what happened next.