Bitcoin’s lack of regulatory clarity has impacted its user base, claims Fundstrat’s Tom Lee
It has been over a decade since the first cryptocurrency, Bitcoin, was launched. Regardless of its years in the monetary world, the mass adoption of cryptocurrencies is still a vision as the industry remains largely in infancy.
Fundstrat’s Managing Partner and Head of Research, Tom Lee, recently elaborated on the same on a recent podcast, where he pointed out that crypto was still very small for the institutional world. The first and the largest cryptocurrency by market cap, Bitcoin, has a network value of $180 billion, whereas gold’s net worth stands at $9 trillion, Lee highlighted. The stock market and the bond market on the other hand, have a massive network value of $66 trillion and $86 trillion, respectively.
Evidently, the network value of Bitcoin doesn’t come up to even half a percent of the network value of other sectors. He further highlighted that people quite often overestimate the size of Bitcoin due to its 20 million holders. He said,
“So if you’re asking someone to allocate 1% to bitcoin — that’s like triple the market weighting, like you’re asking someone to make a massive bet even though it’s 1% of their assets because bitcoin is that small.”
Lee further revealed that the user base of Bitcoin is too small for it to be viewed as an institution as only 1% of United States’ citizens are in possession of the king coin. Additionally, he proposed that Bitcoin was more of a hobby, than an institution.
The absence of infrastructure due to the nonexistence of a regulatory body for Bitcoin allows the involvement of the White House, Lee suggested.
Tom Lee also claimed that this lack of regulatory transparency has an impact on the size of the market. He said,
“You feel like you have reputational risk because you’re extending it to a market that has no regulatory protection if the White House decides they don’t like it.”
Thomas Lee also revealed the impact of this on the price of Bitcoin, claiming that if people had better clarity on regulations, the user base of the coin would increase. Additionally, Lee revealed the potential rewards that the coin would offer to its current small user base who have taken the risk . Lee said,
“It does mean that anyone allocating 1% to crypto has to realize it’s a hyper volatile asset that could, in that path from 1 to 100 could go to .1% of their net worth as well.”