3 Reasons Why Bitcoin Market Remains Optimistic Despite $6,000
On June 23, CNBC Fast Trader hosted a show dedicated to presenting the “Bitcoin Funeral,” a witty introduction to BKCM founder and cryptocurrency investor Brian Kelly’s discussion on the recent bitcoin correction and its future price trend.
Three Reasons why Bitcoin Isn’t Dead
On CNBC Fast Trader, Kelly outlined three major reasons bitcoin will recover in the mid-term back to its previous support levels at over $10,000:
Negative sentiment from investors signalling imminence of a bottom
Positive development within the Japanese cryptocurrency exchange market
Mt. Gox liquidation of bitcoin postponed to 2019
Referring back to the basic rule of investing, Kelly noted that during a period in which the market is extremely bullish and optimistic, it is better to sell and eye a timely opportunity to enter and when the market is overly pessimistic, it is wise to look for a position to enter.
Given the negative sentiment towards the cryptocurrency market by investors, Kelly explained that the major correction of the cryptocurrency market will likely bottom out in the near future, likely in the next two to three months to begin a mid-term rally in the fourth quarter of this year.
More importantly, Kelly stated that the Japanese government’s move to tighten regulations, clean up the cryptocurrency market, and legitimize the Japanese cryptocurrency sector is a positive development for the long-term, as it would prevent major hacking attacks like the Coincheck security breach and allow investors in the public market to gain trust in local exchanges.
“Japanese exchanges were ordered to improve business conditions [by the government]. It’s actually a good thing. Short run it’s going to be a little tough because they’re stopping new accounts from coming in but actually they’re cleaning up the system. They’re making sure it’s more robust. Making sure it’s better for people.”
South Korea, the third largest cryptocurrency exchange market behind the US and Japan, have also started to prepare a cryptocurrency regulatory framework to regulate cryptocurrency exchanges as banks, to prevent hacking attacks and money laundering, while legitimizing the cryptocurrency sector to protect investors and set an industry-wide standard for businesses.
No More Mt. Gox Liquidation
Throughout 2018, several Mt. Gox sell-offs of tens of thousands of bitcoin led the market to crash, preventing BTC from gaining momentum at certain periods.
Kelly emphasized that the delay of Mt. Gox bitcoin sell-off until early 2019 is an optimistic factor to consider, as a major factor to a potential market sell-off has been eliminated, at least in the mid-term.
“Mt. Gox is going into rehabilitation and they’re going to distribute the rest of the $1 billion worth of bitcoin. But here’s what is great about that, they’re not going to distribute it until quarter 1 of 2019. All of the sudden everyone thinks there is going to be a wave of selling. Not happening now,” explained Kelly.
The three factors outlined by Kelly could fuel the next mid-term rally of BTC and the positive developments in the Japanese and South Korean cryptocurrency markets will enable the market to grow with stability and trust from investors, that will be largely beneficial in the long run.