In the first episode of “the bit,” FundStrat Global Advisor co-founder Tom Lee explains different methodologies for valuing bitcoin. Lee shares his short-term and long-term bitcoin price targets based on these valuation methods.
According to Tom Lee, 94% of the variation in the price of bitcoin is explained using their model employing Metcalfe’s Law. Metcalfe’s law says the value of a network is proportional to the square of the number of users on the network. Based on this model, Lee expects the value of bitcoin to be ,000 by the middle of 2018.
FundStrat uses a different method to come up with its long-term price target. According to Lee it is conservative to estimate that bitcoin and other cryptocurrencies would represent 5% of the money parked in gold. Based on FundStrat’s assumptions this would value bitcoin at ,000 by 2022.
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