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Hedge fund manager Brian Kelly says the growing number of institutional investors owning bitcoin is due to the digital currency’s fundamental value proposition: a fixed coin offering. On the other hand, the same interest from institutional investors is helping to build confidence in the leading cryptocurrency by eliminating some of the perceived risks.
Bitcoin value proposition
Kelly’s comments follow reports that the European Central Bank (ECB) wants to issue its own digital currency. Speaking in an interview, Kelly, who is the founder of BK Asset Management, dismisses the idea that a digital currency issued by the central bank poses a threat to bitcoin.
Noting that China and the US have similar plans, Kelly is quick to point out that none of the digital currencies issued by the central bank can match bitcoin’s value proposition. Kelly explains:
I can’t imagine the ECB issuing a digital currency with a fixed offer. In fact, I think (digital euro) will make it much easier for them to digitally print more money.
Furthermore, he claims that it is this creation of excess money by central banks that “poses risks to holders of fiat currency.” The creation of excess money highlights why bitcoin (BTC) is seen as “digital gold”.
Bitcoin vs gold
However, when asked about his bitcoin price prediction, an evasive Kelly offers an explanation of what is likely to happen before the major cryptocurrency makes its biggest breakout. He says:
Bitcoin has been above $ 15,000 for more than 12 days in its entire history. I suspect some people who bought in late 2017 and 2018 may want to go out. So I wouldn’t be surprised to see a retreat.
However, the fund manager says he won’t be surprised if the value rises further in the “long term”. Bitcoin, which trades over $ 16,150 at the time of writing, has a total market value of over $ 300 billion. In contrast, the total value of known gold stocks is $ 9 trillion, a figure that dwarfs the total market value of bitcoin several times over.
Without being specific, Kelly says the current disparity between bitcoin and gold prices means “there is a lot of room for the upside”.
Large traders double up on CME
Meanwhile, in support of Kelly’s strong claims that institutional investors are heavily involved in bitcoin, is the latest weekly report from Arcane Research. According to the report, the number of large bitcoin traders on the CME “has more than doubled this year” as open interest approaches $ 1 billion.
Arcane Research cites a report from the Commodity Futures Trading Commission (CFTC) showing nearly 100 large traders holding the bitcoin contracts on CME. This contrasts with the year 2019, when there were only 45 such large traders.
The report concludes that “this is perhaps one of the best indications of an increase
institutional demand for bitcoin exposure “.
What do you think of Kelly’s bitcoin price prediction? Tell us what you think in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
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