Now, as for the future valuation, Tom Lee, Managing Partner of Fundstrat, put a $25,000 price target for Bitcoin by 2022 in a note to clients published earlier this year. However, and this is important, this view is predicated on cryptocurrencies displacing gold in portfolios with Bitcoin serving a digital store of value.
Why do cryptos have to displace gold for this to happen? What if some really big investors/institutions (e.g., banks, hedge funds, etc.) get involved and start buying? Tens or hundreds of millions of dollars of direct investment could take us a long way given the limited supply of bitcoins and how much people are hoarding them.
It is Tom Lee's premise, so I can only hazard a guess on why he's predicating the price target on this occurrence. As you propose, hundreds of millions of dollars of direct investment could take us a long way, but in my view (and I'm guessing in Tom Lee's view), big investors and institutions are only putting hundreds of millions of dollars of direct investment into bitcoin to occupy the role that gold previously held in their investment portfolios and to serve as a digital store of value. So while I would agree that it
could happen, I would say it only
would happen because it had become a digital store of value for institutional investors, and I am skeptical about that because all it is right now is a speculative commodity.