/Bitcoin plunged below $8,000, Tom Lee Predicts a $25,000 Return

Bitcoin plunged below $8,000, Tom Lee Predicts a $25,000 Return

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Fundstrat’s Tom Lee is standing his ground on bitcoin soaring to $25,000.

On Wednesday, the cryptocurrency plunged below $8,000 and traded at around $7,500, essentially giving up most of the gains bitcoin had managed to make from mid-April to early May after hitting 2018 lows.

But not only does Lee believe Wednesday’s drop is solely due to “typical crypto volatility,” as he said , he also identifies three key factors that still have him believing bitcoin will hit $25,000.

On Wednesday, BTC dropped below $8,000 and traded around $7,500, losing most of the gains it made from mid-April to early May. With Wednesday’s plunge, BTC is now down 41 percent this year. Lee believes the drop is only due to “typical crypto volatility”, and explains his bullish stance with three major factors.

The first key factor is the BTC production and replication costs. Lee said that BTC was “trading at cost”, because the price of production was almost equal to the trading price. Since, according to Lee, the cost production for BTC production was around $6,000 on Wednesday, it is still worth more than its mining cost.

Among the major factors which could trigger a possible price increase, Lee names institutional investors who, while interested in the crypto space, haven’t fully entered the industry due to regulatory uncertainties. He said:

“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. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why Bitcoin rallies.”

Lastly, data compiled by Fundstrat shows a historical trend, by which Lee recommends that investors hold on to their BTC. He said:

“Historically, 10 days comprise all the performance in any single year of Bitcoin’s price. 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.”

This week’s crackdown from the NASAA comes amid growing attention from U.S regulators. Last week, the Securities and Exchange Commission (SEC) brought several fraud cases against operators of ICOs and also launched a website to help investors recognize ‘red flags’ when looking for cryptocurrency investment opportunities.