In November, Lee cut his price target from $25,000 to $15,000. A key driver for the revision was bitcoin’s “break-even” point, the level at which mining costs match the trading price.
Bitcoin is closing out a miserable trading year. The cryptocurrency is down 75 percent since January, trading near $3,324 on Thursday, according to data from CoinDesk. From its high near $20,000 in December, the cryptocurrency has lost more than 82 percent of its value.
For bitcoin to stage a price rebound, Lee said user adoption needs to increase, and it needs to be embraced as a real asset class.
But looking out longer term, if the amount of bitcoin users approached even 7 percent of Visa’s total 4.5 billion currently, Lee’s regression model would place fair value at $150,000 per bitcoin.
“Hence, the risk/reward is still strong,” Lee said. “Given the steep discounts of [bitcoin] to our fair value models, the excessive bearish sentiment about fundamentals does not seem warranted.”
Still, Lee said technicals remain important in cryptocurrency trading and as long as bitcoin remains below its 200-day moving average, investors will likely still stay bearish.