Fund manager Brian Kelly says that the market is mispricing bitcoin and “when bitcoin gets that mispriced it is the sign of the bottom.” He sees a string of “all positive things” that are reflected in the pricing of the cryptocurrency.
Asset Manager Brian Kelly Says Market Is Mispricing Bitcoin
Brian Kelly, the founder and CEO of digital currency investment firm BKCM LLC, was asked about where he sees the price of bitcoin heading in an interview with CNBC on Tuesday.
Kelly manages the BKCM Digital Asset Fund and the REX BKCM Blockchain ETF (NYSE: BKC). He authored “The Bitcoin Big Bang – How Alternative Currencies Are About to Change the World.” In addition, he was previously a hedge fund manager at Shelter Harbor Capital, where he co-founded. He also co-founded MKM Partners, a brokerage firm catering to institutional investment managers.
“For me, when you look at bitcoin, it’s all about network effect and address growth,” the asset manager said. “One of the key metrics I look at when managing crypto money is how fast addresses are growing versus what the market is expecting the addresses to grow.”
Referencing his chart, he explained: “Address growth is basically flat but the market is applying we are going to have a decline of 20% in address growth. We haven’t seen that type of differential since March 2020.” Kelly elaborated:
Generally, when bitcoin gets that mispriced it is the sign of the bottoming process … The market is mispricing what’s going on underneath the fundamentals underlying bitcoin.
He continued: “So we look back to March 2020 when we had a massive divergence when bitcoin was $3,500 and it roared to $60,000. We are looking at the exact same type of situation where it looks like bitcoin is trying to bottom.”
As for his fund’s investment, he disclosed that he “personally added to our fund this month because I think it’s that big of an opportunity. In the fund, we are long and getting longer.”
The fund manager then opined, “Now what I would like to see, obviously, bitcoin is very momentum driven, so now we need to see more price follow through here and get that momentum going,” emphasizing:To me the story hasn’t changed one bit. We are getting institutional adoption. We’re getting an inflationary hedge and regulatory wise, we are getting watered down regulation. Its not going to be banned, we are talking about bringing it into the fold.He reiterated, “Those are all positive things for me and that to me is reflected in that pricing.”Kelly was then asked about how low the price of bitcoin could fall to and whether $30K was the bottom. “I don’t know if $30,000 was the low,” he admitted. “I have pretty high conviction that it was.” However, he noted that “Bitcoin has a funny way of making you look silly.” He affirmed: “If it got down to $20,000, I would be buying with both of my diamond hands for sure.”