Thomas Lee Believes Bitfinex’s LEO Coin Could Negatively Affect Bitcoin if IEO Is $1 Billion
Bifinex, one of the most popular crypto exchanges around the world, would be launching a new digital currency through an Initial Exchange Offering (IEO). This digital asset called LEO could eventually have a negative impact on Bitcoin (BTC), the largest virtual currency around the world, according to Thomas Lee, the co-founder of Fundstrat Global.
Thomas Lee Believes LEO Could Affect Bitcoin
Last week, Bitfinex and the crypto market as a whole were affected by the fact that regulators in New York are investigating financial movements made between Bitfinex and Tether (USDT) without informing users about the funds used to back Tether’s 1:1 peg with the US dollar.
A the same time, Bitfinex announced that it will be launching an Initial Exchange Offering to recover $850 million in funds that are currently frozen in accounts located in Poland, Portugal, and the United States. The exchange aims at gathering $1 billion in funds and be able to recover the funds that are currently frozen.
Thomas Lee, which is also the head of research at Fundstrat Global, explained that Bitcoin could be negatively impacted by the LEO tokens. In a recent tweet uploaded by Mr. Lee, he explained that Bitfinex’s LEO tokens will have an unwarranted adverse short-term impact on Bitcoin. It is worth mentioning that other virtual currencies will be affected as well.
Lee believes that $1 billion IEO is a lot of “new” token supply and the market would have to absorb this supply. He went on saying that there would be no effect on Bitcoin if all the purchasers of the IEO come from the traditional fiat market, which is clearly not going to be the case.
…Unless all the purchasers of the IEO come are new to crypto (fiat to crypto), which makes less sense. https://t.co/no9LlN0yJQ
— Thomas Lee (@fundstrat) May 4, 2019
There will be users that will be selling some virtual currencies in order to purchase the new LEO coin, which is going to have an immediate short-term effect on the price of other digital currencies. He has also explained that $1 billion would equate to a significant selling by crypto miners in the space.
As he explained miners sell $7 million per day, which means that a $1 billion IEO would be equal to almost 142 days worth of miner selling taking place in just a single day.
At the time of writing this article, Bitfinex is the 47th larges digital currency exchange in the market. As per CoinMarketCap, in the last 24 hours, the exchange handled $91 million in trading volume.