Many in the cryptocurrency community thought that Bitcoin bottomed at $6,000, as it held over that price level for weeks on end. However, Bitcoin dropped under $5,800 on the weekend, leading some to believe that Bitcoin’s price could move even lower. Brian Kelly, leading cryptocurrency trader and analyst on CNBC, drew attention to four reasons why he believes the most popular cryptocurrency has found a price bottom.
Bullish Rebound Off $5779, The Cost To Mine One Bitcoin
Kelly opened up his segment by acknowledging that Bitcoin had reached a yearly low of approximately $5,779. Although new lows would traditionally be seen as a negative sign, the CNBC trader noted that the quick rebound off $5,779 is indicative of Bitcoin finding a price bottom. Kelly elaborated on this point, saying:
“Over the weekend we saw Bitcoin hit new lows, I think we saw Bitcoin hit $5779. Then within about 10 or 15 minutes you have a huge ramp up, 100 to 200 points. This is typically the action that Bitcoin has shown at bottoms.”
Brian Kelly also mentioned that the average mining cost of one BTC sits around $5,900, indicating a potential for strong support over that level. Tom Lee, co-founder of analysis firm Fundstrat, also believes that the mining costs are a vital level for the most prominent cryptocurrency to hold.
In an appearance on CNBC, Lee noted that prices for Bitcoin have historically held above mining costs, especially in the cryptocurrency bear market of 2014.
Asian Investment Interest Has Risen, But Is It Due To Currency Devaluation?
Kelly briefly mentioned Asian demand, prompting Melissa Lee, reporter and news anchor at CNBC, to question the cryptocurrency trader about what he specifically meant. Kelly went on to say that an OTC desk saw interest for Tether, “used in global arbitrage,” increase, especially through the Asian exchanges.
The addition of 250 Million USDT was also an indicator which he used, expressing that the issuance of Tether “indicates there’s demand coming, and most of that demand is Asian demand as they most of the Asian exchanges use quite a bit of the Tether product (USDT).”
With Melessia Lee also pointing out that the ‘granting’ of Tether shows that fiat investment into the industry is on the rise.
Last but not least, Kelly mentioned that there is a direct correlation between “currency crisis” and the rise in the price of crypto assets, specifically Bitcoin. The CNBC trader also noted that crpytocurrencies, like Bitcoin “work very well” for being “an alternative currency,” holding its value through a decentralized system in comparison with centralized government-issued currencies.
Kelly specifically mentioning the case with China’s currency issues. He stated:
“If we remember what’s the final option for China here? It’s probably a devaluation of the currency… And if you’re a wealthy Chinese person and you are thinking that’s going to come (currency devaluation), where would you want to put your money? Certainly not in RMB (China’s currency). You may want to put it in some Bitcoin.”
It is still unclear whether Kelly’s price bottom prediction is accurate. But the accuracy of his analysis will become apparent over the following weeks as volatility in this market continues.