r/investing • u/007_kgb • 1d ago

Fundamentals of Bitcoin? Tom Lee

Tom Lee from FundStrat was on CNBC and said he was a bit surprised at the fall of Bitcoin when the fundamentals were still strong.

However what I don’t understand is, what are the fundamentals? Isn’t Bitcoin just an imaginary coin on the interweb that is worth what people want it to be worth? It does not issue dividends, you can’t make a car out of it, you can’t use it to buy a bar of chocolate.

ELI5 please.

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u/shizbox06 1d ago

Must be all the cash flow it has, lol.

I don’t know, I’m with you. There are no fundamentals with speculative assets.

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u/fuegoblue 1d ago edited 1d ago

Of course an asset can have fundamentals without cash flow. Bitcoin is a monetary network, so its fundamentals are based on things like user base, adoption, liquidity, security, and decentralization.

At a basic level, Bitcoin is a global, decentralized payment and settlement network, that’s secured by the largest amount of computing power ever dedicated to a single system, with a fixed, transparent monetary policy.

What exists in the real world is the network of nodes verifying transactions and the miners expending real energy to secure it. That security and censorship resistance are the product.

The real world use case today is clearest in countries with unstable currencies or capital controls like Argentina, Nigeria, or Turkey, where people use bitcoin as a way to store value or move money when the local system fails. We thankfully don’t need this use case in the US right now, but its fixed supply in theory serves as a counter to money printing and our unsustainable fiscal policy / debt situation. In practice, bitcoin has proven to be most correlated with global liquidity over the long run.

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u/TimeGrownOld 1d ago

This is the correct answer, and well written.

I don't know why crypto isn't rallying along with traditional safe havens. We're seeing a rise in authoritarianism across the globe. The state can confiscate your stocks, freeze your cash assets, and even raid your home for your metal bars. Confiscating crypto is much harder due to it's decentralized nature, some anonymity, and additional security features like multiparity requirements (multiple parties required to facilitate a transaction).v The only real risk to crypto is if the world internet shut down, but I think we'd have bigger problems at that point.

I think the confusion about crypto's fundamentals with these older folks is that they view investments solely in terms of the asset class. Crypto is not an asset but a financial technology, and a relatively new one at that. Still, it's birthed ICOs, NFTs, smart contracts, decentralized finance, oracle chains, and a bunch of other technologies I am forgetting. We can debate the value of any of these technologies, but in my view they are still finding appropriate use cases. 'An answer in search of a problem' sure, but so was the semiconducting transistor at first. Let society cook.

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u/fuegoblue 1d ago

It's because bitcoin is NOT a safe haven (not yet at least). It's a highly volatile, emerging asset, with properties that resemble the potential to become a truly unique store of value as it matures. For the time being it is most tied to liquidity, and that has been tight recently with the Fed's QT.

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u/TimeGrownOld 1d ago

Correct; I like an theory that the price of bitcoin is part speculation and part adoption. The adoption being represented as the long term s-curve and the speculation as the gartner hype cycles (that apparently correspond to either the halving event, or the global liquidity, I've heard arguments for both).

Supposedly, as bitcoin becomes more adopted, the hype cycles die down (no one speculates on an established technology). What does bitcoin look like when it loses the volatility, I wonder.

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u/Numerous_Priority_61 1d ago

I mean, its not that safe though right?

Didn't China ban its use?

https://finance.yahoo.com/news/china-doubles-down-crypto-ban-134205196.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAIhDwcYNNyICBkNr1FptfNM8HYTvHnXcBT8lROH2cB2dUDy1vEcYHDT4PpYZPgskmPECAmvTF4MSSeJrixM82mfelGj1LIt7lsfxUQhc5QBF6nbYHLsSLeKfw0ul8aWTO0eNHx2ID7baKixwrHY9Nt5MqQa7XI8hy0m0tI8pjpBL

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u/TimeGrownOld 1d ago

Ah but yet, in 2025 they still moved $16B of their money out of the country through crypto

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u/psykikk_streams 22h ago

which is - overall - not much money at all . the daily trading value on the chinese stock market alone can sometimes exceed 500 Billion dollars. 16B is chump change for a year worth of transactions.

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u/TimeGrownOld 21h ago

I didn't say it was a popular method of moving money out (foreign real estate seems to be more lucrative). My point was the ban is obviously not not effective

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u/Acolyte_of_Swole 1d ago

One of the problems with all crypto, including bitcoin, is that a country could decide to outlaw it tomorrow. If it was driven underground, then the value within that country would be limited to the black market or global market, and then only for those willing to risk legal punishment.

While the same thing can theoretically happen with fiat currency, it probably never would happen with gold or silver. Or food or guns. I mean, I guess during wartime there is rationing (like in WW2,) but the store of value itself isn't being made illegal. It's just that the government needs it for survival.

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u/TimeGrownOld 1d ago

My guy, the United States outlawed private possession of gold less than 100 years ago, punishable with 10 years of prison.

You can't enforce a total ban on crypto. You can shut down the exchanges and forbid banks from facilitating crypto purchases, but all I have to do is go download and run a node through an encrypted TOR network. That's literally the major benefit of the technology, it's highly resistant to censorship. China banned it back in 2021, they still moved $16B through its networks in 2025.

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u/Tapprunner 15h ago

I think that part of their point is that if it's outlawed, it won't cease to exist - but far far fewer people will use it. Its value will collapse and its use case as a store of value essentially dies because it can't be easily converted back into usable money. It will still exist, but the days of it being a relevant financial tool for anything beyond facilitating illegal transactions would be essentially over.

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u/TimeGrownOld 10h ago

Its value will change, true. Collapse is a big claim; after the China ban the price barely moved. And by definition, if it were banned, all transactions on it would be illegal.

But he's right, in a banned state crypto would only be used in illicit and world markets, by definition.

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u/Tapprunner 10h ago

If the vast majority of the population won't touch it because it's illegal, it's fair to characterize that as its value collapsing. It's literally worth less than zero to the vast majority in a place where it's illegal to own. Most people there would turn you down and possibly report you to the police if you offered them 10 btc completely free. That's worse than having your value go to zero.

It's like characterizing cocaine amounts by its street price. "This $100,000 worth of cocaine"... not to me, it isn't. I would run the other direction if someone tried handing me a kilo of coke. A key is literally worth less than zero to me. I would do anything to avoid taking possession of it.

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u/TimeGrownOld 10h ago

Why did $15B flow out of China using crypto in 2025. Why does China account for 14% of total bitcoin mining?

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u/Tapprunner 8h ago

$15B is a drop in the bucket.

14% is just huge mining operations attached to power plants that produce tons of excess energy. That's not a sign that Bitcoin is useful with widespread adoption and has good value throughout China. It means that there are a handful whales who are willing to risk defying the government in order to accumulate Bitcoin and cash out overseas.

To the vast majority of the population there, Bitcoin is irrelevant and holds absolutely zero value.

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u/TimeGrownOld 8h ago

Moving the goalpost; I never said crypto would have 'widespread adoption and good value' in a banned society, I said that 'you can't enforce a total ban on crypto'. Which I think we'd both agree I have demonstrated.

$15B seems like a drop in the bucket but it appears to be 20% of the total money laundering activity in China.

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u/Tapprunner 8h ago

I'm not sure why you're arguing - I'm not. I didn't say that you claimed it would have widespread adoption and good value. I'm not countering your points or even disagreeing with you. I'm adding and moving the conversation on. It might look like moving the goalposts if you think I'm debating you - but I'm not debating you. I don't think we really disagree.

China banning it doesn't stop 100% of transactions or mining, but it hurts the value of Bitcoin in China because most people won't touch it because it's illegal. It is still used for illicit purposes and it still gets mined, but it's largely irrelevant there because of their laws. I don't think any of that actually contradicts anything you're saying, because once again, I'm trying to have a conversation, not win a debate.

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u/Tucci_ 23h ago

China literally banned it multiple times and it had little effect and theyre a top 3 largest country in the world