Bitcoin

Regulatory Uncertainty Pushes Bitcoin Below $8,000, Tom Lee Predicts a $25,000 Return

Thomas Delahunty | May 23, 2018 | 10:03 pm
Bitcoin
Bitcoin

Regulatory Uncertainty Pushes Bitcoin Below $8,000, Tom Lee Predicts a $25,000 Return

Thomas Delahunty | May 23, 2018 | 10:03 pm

Bitcoin’s two-week sell off continued today, seeing the coin fall to below $8,000 — $7,500 at the time of writing — and hitting levels not seen since mid-April.

Regulatory Moves Impact Bitcoin’s Price

And it’s not just Bitcoin, many other top cryptocurrencies were also in the red today despite bullish calls that coin prices would soar following major blockchain events in New York City that have been taking place over the past week.

Some in the cryptosphere have pointed to recent regulatory news as the key driver of the sell-off. This Monday, financial authorities in the U.S. and Canada announced a cooperative crackdown on initial coin offerings (ICOs) and other cryptocurrency investment schemes, led by the North American Securities Administrators Association (NASAA).

More than 40 state and provincial watchdogs are participating in ‘Operation Cryptosweep,’ which has triggered at least 70 investigations so far.

“This [Operation Cryptosweep] cleaned out a lot of the bad projects,” said CNBC’s Brian Kelly. “That has people a little concerned, and is a short-term hit to sentiment.”

Moving forward though, Kelly points out that these regulatory steps are all part of the maturation that the market needs in order to attract institutional investors. “The projects that they shut down they appear to be junk, they had a real reason to shut them down,” he said.

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.

Tom Lee Predicts Rebound

Despite these recent price woes, Fundstrat’s Tom Lee still believes Bitcoin will reach $25,000. In an email to CNBC, Lee attributed today’s drop to ‘typical crypto volatility.’ He also identified three key factors that have him believing the coin will more than triple its current value moving forward.

The first is related to the cost of producing and replicating the cryptocurrency. When Bitcoin was trading at around $8,000 yesterday, Lee appeared on CNBC’s ‘Futures Now,’ where he expressed the belief that the digital currency was actually ‘trading at cost’ because the price of production was actually around that number. With this, it is likely Lee is referring to recent data from Morgan Stanley that puts the Bitcoin mining profitability at just over $8,000. This means that if miners want to turn a profit, the coin in theory has to stay above this number.

Lee’s second factor relates to the catalyst that institutional investors will bring to the cryptocurrency space. “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.

Lee’s third factor relates to data compiled by Fundstrat, which show a historical trend that has him encouraging investors to hold onto the coin. “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.”

Lee continued: “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.”

Featured image from Shutterstock.
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  • Steffen Søborg

    Tom Lees predictions are bs and counter-productive. Bitcoin is a censorship resistant digital asset, that may or may not be used as a store of value. If you have a use for that, good, buy it. But if you just want to get rich quick, stay away

    /rant

    • Greg

      define quick

  • Carlos Salinas

    Tom Lee is a liar… you can mine 1 bitcoin for 550 bucks in countries like venezuela, and of the miners go the hell out of the shitcoin network the difficulty decreases so… you can mine them cheaper

    • Ryan Donohue

      100%. Some people don’t realize how cheap it is in other countries.

    • M M

      how? everyone will travel there.

    • DanJR

      You can’t mine it for $550 in Venezuela. 2nd of all, your life is at risk and your company is at risk of nationalizing in that pos country.

    • Alex

      if there’s a new altcoin out there that we dont know that will take BTC, then bitcoin is “toast”, if NOT then it could definetly jump to 20k, even 30k by December…..

  • husta5

    Bitcoin is an envelope we keep the money; before giving to newly weds or relatives. The amount inside the envelope differs from time to time. Such as once it were almost 20K$ in December. Now it hardly contains 8000$.
    When you look from a distance; all envelopes are the same and can’t guess which one is given by who to whom. So this makes all regular banking instutions frightened of loosing control of our assets in their hands.
    That’s why they keep the value of BTC in fluctuation with speculations and other similar coin/token instruments they have built and have been using in time.
    When they decide & confirm that they have the 100% of control on BTC, the value of it will be quickly risen over a million bucks with in a few weeks just as it went to 20K$ from 4,5K last year in 11-12 weeks.

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