- Fundstrats’ CEO believes that the market is still immature.
- Lack of regulatory approval discourages institutional players.
Only 1% of the US citizens own bitcoins, which is too small for the institutional market, says Tom Lee, managing partner and a head of Fundstrat Global Advisor.
Lee identified major factors that prevent large investors from having exposure to Bitcoin in a recent interview with the Block. He believes that the market is too small and its infrastructure is immature for institutional players.
“There’s a mechanical issue for crypto in terms of infrastructure that’s needed but there’s probably also a size of market issue,” he said.
Specifically, he compared Bitcoin with gold, stocks and bonds.
Lee believes that about 1% of American citizens have some Bitcoins, which is not sufficient for the institutional market.
Also, he said that the cryptocurrency market infrastructure was underdeveloped, which might be a consequence of the lack of protection from regulators.
“There’s not enough legal and regulatory protection for bitcoin in the U.S. to prevent a White House executive order banning bitcoin, like nothing today would prevent bitcoin from being outlawed in the U.S.”
Regulatory uncertainty leads to the fact that institutional investors have to take on additional risks.
Over the past few weeks, Tom Lee’ made several comments about the role of institutional investors. In September, he said that investors buy bitcoin amid low economic and geopolitical uncertainty; he expressed confidence that the launch of the Bakkt platform will attractf large players to the market.