Bitcoin appears to be raw in business.
Having crossed above the $9,000 level on Sunday ahead of Facebook announcing its own cryptocurrency, Libra, bitcoin is now up 146% this year. But that could be upright the beginning for its bounce back, says bitcoin bull and Fundstrat Global Advisors’ research chief Tom Lee.
“I think bitcoin is doubtlessly going to take out its all-time highs” of $20,000, and has the potential to run to $40,000 if its use cases grow, Lee said Tuesday on CNBC’s “Approaches Now.” “We’re deep into a bull market, and people are pretty silent about it.”
In his latest note, Lee wrote that he experience there was a lack of conviction about bitcoin’s recent rally, based on his attendance at the CryptoCompare Digital Asset Pinnacle in London last week.
Many in the crypto space were hesitant to agree that the “crypto winter” was really over, Lee wrote. They cited worries around persistent volatility in alt-coins and initial coin offerings, fundraising affairs in the digital currency market, general bearishness and residual concerns stemming from crypto’s huge drop in 2018, he wrote.
But Facebook’s modern move serves to legitimize the space in a way that could provide further runway for bitcoin, which could true level become a “reserve currency in crypto” down the line, Lee said Tuesday.
“The Facebook announcement is a complete validation that mainstream is now focused on cryptocurrencies,” he weighted. “I think it really destroys those arguments that say, ‘I believe in blockchain, not bitcoin.'”
And, while Lee saw Facebook’s Libra work as “clearly a cryptocurrency play,” the main thrust of it revolves around the idea of decentralized finance, he said.
“I think it is multifarious targeted at stablecoin and creating a new kind of banking system, and it’s very complementary to bitcoin,” he said. “So I think this is as a matter of fact a really bullish development for bitcoin. I think it’s really bad for stablecoins and anyone who’s been trying to do decentralized finance.”
Facebook’s contemplate has the backing of payment processors Mastercard and Visa, as well as travel giant Booking Holdings. Lee noted that decentralization in accounting is “probably really good for payment processors” but will likely pose a challenge to traditionally structured banks.
“One instrument to keep in mind [is] Facebook’s annual revenue per user is probably $50. That might be a little high,” Lee maintained. “But an average bank generates close to $1,000 per user. So, Facebook has a 20x upside to their customer model if they start doing banking aids, and so I can see why banks aren’t really enthusiastic about this.”
Bitcoin was down nearly 3% toward the end of Tuesday’s occupation session. The digital currency managed to retrace its 2018 highs in late May.
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