Top ecosystem prophet Tom Lee of Fundstrat Global Advisors laid out four reasons why crypto enthusiasts should be optimistic about the future: growing trust in digital assets, a millennial boom, crypto being recognized as a genuine asset, and the imminent arrival of Wall Street players.
To begin with, it is worth noting that Tom Lee, who is a veteran of the financial industry, is a researcher and this means that he does not manage capital, and his entire business is based on the trust of clients. He does not impose his opinion in a propaganda sense, as he encourages everyone who listens/reads to come to their own conclusions. It simply presents data and draws conclusions.
Tom Lee - It all started with an idea
Mr. Lee's thesis begins by defining how bitcoin was launched from zero cost, without venture capital and without backing. He grew up without public discussion. Even his own clients disagree with the focus on cryptocurrencies as an investment strategy.
Monetary systems are built on trust-based governments, and that trust is steadily being eroded both in the United States and around the world. In fact, for Americans, trust in government is at a fifty-year low. In places like Brazil, Argentina, Greece, confidence has bottomed out, coinciding with the rise of interest in cryptocurrencies. These simple facts don't seem to bode well for the future of fiat currency.
Millennials are the largest single generation in history
Millennials will be a gigantic economic force, especially when you consider that they make up roughly 96 million people, the largest generation in human history. The average age of this group is now 26 years old, and it is important to consider their mindset.
According to a 2016 survey, 92% of millennials do not trust banks. Cryptocurrencies are giving young people what they crave: decentralization, digital environment and lack of trust are the keys to future acceptance.
Every year, about a trillion dollars are given away by people aged 35 to 60 as an investment. Millennials are only now breaking the threshold of 35. For example, the “Silent Generation” in their 35-60s bought gold and in ten years raised its value from $40 to over $600. In 1982, the Boom Generation turned 35 years old and between 1982 and 1989 there was a stock market boom when they bought shares. "Generation X", a much smaller number of people, in the 1990s, 2000s invested in e-commerce, the cell phone industry, created Amazon and Google.
According to Mr. Li, if the trend continues, millennials will soon invest a trillion dollars. The rise of bitcoin around 2016 coincides with the first investment of millennials.
Millennials could very well place ten percent of their trillion dollars, or $100 billion, on the crypto market. Tom Lee suggests that at the end of the millennial cycle, the capitalization of bitcoin could reach 10 billion US dollars.
Digital assets
Recently, the St. Louis branch of the Federal Reserve Bank issued a document recognizing cryptocurrency as a new asset class - a digital asset. With evolving financial strategies and realities (for example, 20% of all public tech companies are actually making a profit), and much of the value of S&P companies is "intangible."
Bitcoin is in the category of markets valued at $280 trillion, where people tend to trust assets: gold, art, real estate, government bonds, cars, etc. Bitcoin is valued at $200 billion on average, and if Bitcoin gets only 1 percent of these markets, the price will be $150,000 per coin, Mr. Li emphasizes.
Wall Street
Another reason for optimism about the future for bitcoin is the prospect of entering the Wall Street game. Currently, the largest exchange is ICE, and its revenue is about 4.6 billion US dollars. Crypto exchange Coinbase, in contrast, has only 3 percent of ICE's trading volume. Mr. Lee believes that this year the figure will be about 600 million.
Mr. Li believes that within 18 months, Coinbase could overtake ICE as the most profitable exchange in the world. It is also worth noting that such giants as Goldman and Morgan Stanley create their own gateways for working with cryptocurrency.
The capitalization of the cryptocurrency market at times exceeds the figure of Ireland, Spain, Greece. Wall Street has invested heavily in these countries, and it may not be financially sound to think that the professionals will move past cryptocurrencies.
Finally, Bitcoin and crypto remain largely untethered to other markets, which is a good reason to add them to traditional portfolios. Tom Lee suggests that firms will not dive into the world of cryptocurrencies, and they will see good earnings growth, not portfolio volatility, if they invest as little as 2 percent of their funds in this market.
Post a Comment