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Tom Lee: Millennials’ Distaste for Banks Could Trigger New Wave of Crypto Financial Institutions

August 12, 2018

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.

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.

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.