Tom Lee, head of research at Fundstrat Global Advisors, told Bloomberg that in his opinion, the 30% drop in the price of Bitcoin just before Christmas was actually very healthy.
“Well, I don’t think that anyone should be surprised if Bitcoin is pulling back given it’s nearly tripled in the last six weeks, so I would say it’s very healthy, otherwise we’d be staring at a parabola that’s gaining in acceleration, right? It would just mean that by the end of next year we’d be having to do log functions on the price,” he told Jonathan Ferro on the segment Bloomberg Daybreak: Americas.
The price of Bitcoin fell to a low of about $12,000 on the 22nd of December, causing some concern amongst investors. But considering that we are talking about a widely held asset losing value in the tens of percent, people were not as concerned as one might expect.
For one thing, Bitcoin has been declared ‘dead’ 217 times on one particular site and has always rebounded.
Bitcoin has “crashed” 30% SIX TIMES in 2017. Each “crash” has been followed by an increase of: 76%, 237%, 183%, 165%, 152%. Bitcoin takes 7 steps forward, 2 steps back, 7 steps forward, 2 steps back. Every 2 steps back is heralded as the end of #bitcoin. Relax! pic.twitter.com/bV5ZFeucTp
— Robert Reid (@robertreidmd) December 22, 2017
This happened this time too – Fortune reported on the 23rd that the price rebounded by over 40%.
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Lee said that the dramatic rise in price is simply a reflection of network value – this is an asset/payment system still finding its place in the world, with price rising rapidly as first-time use spreads.
Given this, price corrections should be (and have been) expected: “If anyone says that Bitcoin is trading on pure speculation, they haven’t done their work,” said Lee.
Regarding the bubble question, he pointed out that only a minority of financial institutions hold Bitcoin, and asked: “How can something be deemed a bubble, [if it’s] only held by a few?”
Looking at reddit, it seems that the cryptocurrency community agrees with him. If anything, it was the ridiculous explosion in price that was worrying – the correction is brought things back down to earth.
Hope it’s a bargain! pic.twitter.com/GfCwSMxuKw
— Bobby Lee (@bobbyclee) December 23, 2017