Fundstrat co-founder and crypto bull Tom Lee says Millennials’ aversion to banks has the power to dramatically reshape the financial landscape, with crypto-friendly companies like Robinhood and Square poised to reap the benefits.
In a series of tweets, Lee points to the recent crypto announcement from ICE, the owner of the New York Stock Exchange, as a sign that crypto is creating the dawn of a new financial era. He also highlights how a number of financial bedrocks like Goldman Sachs and American Express are finding ways to leverage themselves to prepare for a Millennial departure from traditional banking.
MACRO 1/ Financials are set to get a tailwind from Millennials reaching "prime leverage" years. @urbaninstitute published an interesting study showing the debt levels by age and we annotated "prime leverage" years as age 30-48 pic.twitter.com/wDEFKLtQib
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 10, 2018
MACRO 2/ The number of "prime leverage" age Americans fell from 2001-2008 but debt kept rising (hence, crisis) but notice how figure now set to accelerate from -3% 5-yr growth to +6.6% by 2025, massive acceleration. Notice how "boomers" created a similar surge from '75-'90 pic.twitter.com/V43fScyX55
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 10, 2018
MACRO 3/ Since 1933, Financials consistently and continously outperform the S&P 500 when the 5-yr CAGR of "prime leverage" age adults is positive and rising. 1935-1955 and 1975-1989. #Millennials are set to accelerate this from 2018-2026. Positive tailwind for #Financials pic.twitter.com/Cmou7wZ3ns
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 10, 2018
MACRO 4/ Risk to this, Millennials generally do not like #banks so there may be a new wave of Financial institutions that gain. But @jpmorgan @AmericanExpress and @GoldmanSachs $AXP $JPM $GS look lsolidly leveraged to this. Also wins @Square @RobinhoodApp #bitcoin @ICE_Markets
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 10, 2018
In addition, Lee points out that ICE’s new crypto platform Bakkt is likely to have distinct advantages over current crypto exchanges like Coinbase. ICE plans to create a new type of one-day futures contract that actually pays out in Bitcoin.
[the_ad id="42537"] [the_ad id="42536"]Since ICE long ago cemented relationships with big financial institutions like JPMorgan and Fidelity, Lee says this will ultimately create a path for mainstream investors to obtain Bitcoin through their brokers, which will lessen the need for a Bitcoin ETF.
1/ A week since the @ICE_Markets announced creation of #Bakkt (https://t.co/rBsA06ASnB) and after conversations, it seems it is not entirely clear what differentiates #Bakkt **Call-out to Justin Saslaw of Raptor Group has been really helpful here. Some insights:
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 9, 2018
2/ #Bakkt is offering 1-day futures contracts of physically delivered #BTC. A contract buyer receives #BTC next day. Buying Bitcoin via Bakkt similar existing exchanges like @coinbase @binance But ICE/Bakkt has several advantages…
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 9, 2018
3/ ICE already has existing and approved trading relationships with banks like @jpmorgan and brokers @Fidelity @CharlesSchwab etc and means that this is a natural pathway for traditional retail investors to access Bitcoin via their brokers. ICE is owner of @NYSE
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 9, 2018
4/ ICE is the counterparty to the trade (just as @coinbase and @binance are counterparties if u use them). ICE has tremendous financial resources with revs $6 billion (financials https://t.co/uUlViK2W2E) and $85 billion in assets. As a custodian/counterparty, money good.
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 9, 2018
5/ Bakkt is doing 1-day settled futures and not spot, because this entity is under the purview of the @CFTC (and #cryptodad @giancarloCFTC) and if it was spot, it would be @NewYork_SEC (not positive but I believe this is the case).
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) August 9, 2018
According to a new survey, cryptocurrency is one of the few things millennials are actually investing in these days, as a way to save for retirement funds.
