Bitcoin hitting $200,000 before it fell to $16,000. Here’s why they’re still hopeful after a ‘horrific year’ for crypto

Bitcoin’s price target at $200,000 in the coming years. That was before the Crypto Winter of May when several cryptocurrencies and lenders failed, and that turned out to just be a prelude to last month’s shocking collapse of FTX, one of the largest crypto exchanges in the world, in a matter of just 48 hours. Now Bitcoin is trading at $16,000, down from a peak of $70,000.

Tom Lee, Fundstrat Global Advisors’ managing partner and head of research, says it’s been a “horrific year,” but insists that crypto isn’t dead. Rather, Lee sees it as a moment of reckoning for the sector.

“It’s an important moment for the industry,” Lee told CNBC’s Closing Bell: Overtime last week. “I think it is cleaning a lot of and cleansing a lot of bad players… But do I think crypto is dead? No. I think there's a lot of people throwing gasoline in a crowded theater and yelling ‘fire.’”

While he recognized it's been bad, saying “nobody’s made money in crypto in 2022,” he said that it’s not so different from the Crypto Winter of 2018, which was when some of the best projects were created.

FTX’s implosion—triggered by a liquidity crisis after Changpeng Zhao, the CEO of rival exchange Binance, tweeted that the exchange would sell its holding of FTX’s FTT token—sparked a selloff that led it to quickly file for Chapter 11 bankruptcy, and founder and CEO Sam Bankman-Fried to resign. But Lee said FTX’s collapse wasn't due to a flawed business model but rather a lack of internal regulation.

“If you look at an industry like crypto that’s self-regulated, it is important to create, essentially, some sort of functioning central-bank-like activity that can conduct operations when there is stress,” he said. “So I don’t think the FTX model was flawed; it’s just, FTX itself was not capable of playing that role.”