“Bitcoin’s user base is too small for institutional capital”

According to the founder of Fundstrat, Tom Lee, the real number of Bitcoin users does not exceed 500,000, and the estimate of 50 million is significantly overstated.

According to him, in the figure of 50 million there may be many who joined the market in 2017 against the backdrop of general excitement, but then left it.

“I think that cryptocurrencies have prospects to become an independent asset, but the current user base of 500,000 people is too small to enter this institutional capital industry. This market will cost more when 50 million people use Bitcoin on a day-to-day basis, ”he said in an interview for BLOCKTV this Tuesday.

When it came to the start of trading in deliverable bitcoin futures on the Bakkt platform, Lee said that the current trading volumes, which are quite low, are just talking about real current demand from institutional investors.

“It seems to me that the launch of the Bakkt platform only partially affected the latest fall of bitcoin. Buyers were too optimistic. These sentiments needed to be reset, and Bitcoin needed a long flat after growth at the beginning of this year. However, I do not think that bitcoin can be considered a defective protocol. According to the data that I have, many institutional investors want to enter this industry, but cannot do it because of the size of the market and low liquidity, ”Lee added.

Lee takes a positive view of the measures taken by the US Securities and Exchange Commission (SEC) regarding the regulation of the cryptocurrency market, because they favorably affect the industry in the long term.

“I think the approval of the ETF will not be earlier than in a few years. But this tool will become the main mechanism for institutional investors to join the market. According to our expectations, ETF will provide demand for $ 30 billion during the first year of its existence. This is a fairly large amount when compared with the current liquidity of the first cryptocurrency. Bitcoin quotes should be in the region of $ 150,000 so that this instrument is sufficiently liquid and can cope with the volumes that will come with ETF approval, ”says Lee.

According to the analyst, bitcoin may continue to decline in the near future. This will be due to the emotional state of investors.

“Fluctuations that will occur over the next few months are not important over a longer distance. If bitcoin falls, investors will have the opportunity to buy more coins before halving the miners’ rewards, ”he concluded.