CNBC held a mock funeral for Bitcoin following a steep price decline from USD 20,000 in December 2017 to less than USD 6,000 as of this writing on 24 June 2018. They said they would no longer be covering Bitcoin and jumped immediately into a Bitcoin funeral to commemorate all of their Bitcoin friends and memories. However, Brian Kelly boldly interrupted the funeral saying “this is not the funeral for Bitcoin whatsoever”.
He said that “when we start to declare a funeral and things get really horrible, then sentiment is approaching the lows”, which could be a sign that Bitcoin is near the bottom of its bear market and its price would rebound soon.
Stepping back and looking at the long-term chart, Brian Kelly pointed out that a year ago, Bitcoin was at USD 2,500, and therefore it is up significantly over the past year on average. He went on further to say that 60-70% price declines like what we’ve seen this year were normal for Bitcoin. Evidence shows he is absolutely correct – this sort of Bitcoin bear market has happened multiple times. Not only has this sort of bear market happened in the past, it’s always followed by an even bigger rally bringing Bitcoin to new record highs.
One of the biggest news stories that caused a significant decrease in Bitcoin’s price this week is that the Japan Financial Services Agency is demanding information and improvements from six Japanese cryptocurrency exchanges, with the goal of protecting customers. Brian Kelly said that even though this hurt Bitcoin’s price, it was actually positive news since it would make the system “more robust, better for people”. Indeed, increasing regulations and oversight is making cryptocurrency exchanges safer for institutional investment, which could end up bringing more money than ever seen before in the cryptocurrency markets.
Brian Kelly also mentioned Mt Gox’s plan to finally refund customers with BTC 137,891 that were recovered worth USD 800 million as of this writing on 24 June 2018. He said although some people were worried about a wave of selling, the refunds wouldn’t happen until at least Q1 of 2019. Regardless, Bitcoin trading volume is several billion USD per day so Mt Gox’s refund is unlikely to have any noticeable effect on the markets.
In response to a question on whether Bitcoin futures have caused the market to go down by providing a mechanism to short sell, Brian Kelly said that Bitcoin futures did not have enough trading volume involved. He instead blamed tax selling and a string of cryptocurrency exchange hacks.
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