As the bitcoin dominance index expands to 53.7%, indicating that bitcoin’s value contribution to the broader cryptocurrency market is strengthening, industry veterans are extrapolating future price direction, drivers and leading indicators. It’s a reminder of the early innings in which the cryptocurrency market remains, one whose potential and drivers are still being uncovered. Fundstrat Co-Founder Thomas Lee and BTCC Co-Founder Bobby Lee both shared their latest analysis with the public, and both conclude that bitcoin is on a bullish path for the foreseeable future.
Fundstrat’s Lee on CNBC points to mining and the network effect as drivers of bitcoin’s value, but he expanded on that theory, noting that “macro factors” are also at work in network value. Lee dug up a correlation between the MSCI Emerging Markets Index and the bitcoin price, one in which a pattern has developed between the assets. The MSCI was launched in 1988 and boasts more than “$1.9 trillion in assets benchmarked to the MSCI Emerging Markets Index suite.”
In the below illustration, the orange line represents the MSCI Emerging Markets Index, which had a bull run at year-end 2017 even as the bitcoin price was peaking. Meanwhile, the MSCI Emerging Markets Index, like the bitcoin price, has been under pressure for much of 2018.
Lee’s theory is two-pronged, comprised of macro hedge funds, which are playing an increasing role in the crypto market at exchanges like BitMEX, and the ‘wealth effect,” which reflects emerging market local investors who have less money to invest in bitcoin when their respective stock markets are in decline. Lee maintains his bullish forecast a bitcoin price of around $20,000 by year-end, reminding investors that bitcoin’s yearly gains tend to boil down to the 10 best trading days of the year.
Meanwhile, BTCC Co-Founder Bobby Lee is looking further out into the future, predicting a bitcoin price of $60,000 in the next few years. Lee launched a tweetstorm centered on the future of the bitcoin price and mainstream integration.
#BitcoinMining industry is at just $12 million/day, compared to $335m/day for #GoldMining industry.
I predict #hashpower will continue to grow for #Bitcoin with daily $ numbers increasing.
Once global daily output reaches $54m in 2+ years, that would give $BTC a price of $60,000.
— Bobby Lee (@bobbyclee) August 26, 2018
Bitcoin miners have remained steadfast throughout the market downturn, as evidenced by a rising bitcoin hashrate, which shows the amount of computing power earmarked for mining, has proven resilient, even bullish. With the bitcoin price perched comfortably above $6,700, having surpassed a couple of key areas of resistance this week, miners are on their way to greater profits.
Meanwhile, ARK Invest Analyst Yassine Elmandjra tweeted that bitcoin’s daily transactional value over the last year is between $3 billion and $4 billion, or $1.3 trillion in 2018, which while still a far cry from Visa and Mastercard surpasses that of PayPal and Discover.