On being asked about the significance of qualitative factors in terms of current market maturity, Tom Lee opinionated saying that it is difficult to use qualitative methods to measure projects in the cryptocurrency space. This, he stated, was because the cryptocurrency space is still in the early development stage and does not have a huge number of winners and losers. He added:
“…for instance what we found is the correlation and we tracked 50 currencies cross-correlations. It’s incredibly high, which means, for the most part, the market trades with each other, you know they move in the same direction. But we’ve attempted to sort of provide some insight by sectorizing the market.”
Subsequently, Fundstrat makes all these research reports free for the public to download and view, stated the Head of Research. This is to enable people to learn about ways to track the market. Tom Lee believes that the one project that has really stood the test, across nine years, is Bitcoin. He justified his point by citing some of the big players. He said:
“…because you know what people forget is Netscape and Yahoo were founded roughly the same year as Amazon and Netflix. Okay so FANG [Facebook, Amazon, Netflix, Google], there’s FANG and then there’s the failed FANG which is Yahoo and Netscape. It took less than seven years for both to fall to the wayside.”
Tom Lee also mentioned that Yahoo has not failed but it is also no longer dominant. Lastly, he stated that nine years in the cryptocurrency markets is an equivalent of thirty years in the traditional markets. Hence, this is why the researcher believes that Bitcoin has won the markets and proved itself.
Regarding the correlation of Bitcoin to the stock market, Tom Lee said that there is a high probability that Bitcoin will remain uncorrelated. However, the cryptocurrency space will become correlated, according to Tom Lee. In his words:
“Crypto will become correlated because securitization or tokenizing traditional assets is probably going to be a very big growth area… So you may have fractional Apple, fractional oil and I think that those securities will obviously be quite correlated with public markets.”
He concluded by stating that Bitcoin is a store value, therefore, the fact that it has a low correlation to the equity market is justified.