The ongoing bitcoin price recovery might be short-lived and prices may suffer another retracement, but falling prices will be temporary and bitcoin remains a solid investment in the near-term.
This was the investment opinion of Blockchain Capital partner Spencer Bogart, speaking to Melissa Lee on CNBC’s “Fast Money” this week. The venture capitalist, who has consistently maintained that bitcoin is a “screaming buy” said that he believes there will be downward pressure on the bitcoin price in the next few months due to a coming supply glut caused by crypto funds exiting their lockdown period.
Nevertheless, he said, bitcoin remains the most solid asset in the crypto space because it has a unique combination of mindshare, global presence, demonstrable use case, and freedom from SEC regulations after being classified as a commodity by federal regulators.
At 17:30 EST on Monday June 25, Bitcoin rebounded from dipping under $6,000 to about $6,200, much to the relief of the market, though it ultimately pared that recovery over the following 24 hours.
In Bogart’s opinion however, the next few weeks and months will see a round of selloffs as crypto hedge funds seek to redeem funds after the one year lockdown cycle for investors who came into the market under more bullish circumstances in summer 2017.
“Summer 2017 maybe 100-300 new crypto hedge funds were formed, and one year since then, a lot of them are reaching the end of the 1 year lockup. The LPs in those funds are now looking at a down-50% year. They’re saying, ‘hey, I want to redeem out of that fund’. That means forced selling on behalf of all of these new crypto funds that have popped up. I think that could take prices artificially lower, and [Bitcoin is] very attractive to buy at these levels.”
Despite this he said, he is “super bullish” on crypto, particularly bitcoin which he described as the only coin to demonstrate wide adoption and a practical use case.
In his words:
“A lot of coins are ICOs are still very overvalued, but Bitcoin has the mindshare, the general awareness and global distribution that no other coin has. From a regulatory perspective it is also the safest due to the SEC decision [that it is not a security]…It is also the only coin that has demonstrated use case and traction in terms of moving and storage value all over the world.”
In his opinion, investors should not wait for the market to find a bottom, or else they will end up paying higher prices for the asset than they are doing right now. The right strategy he said, is not to attempt to time the market, but to average into it.
In a separate development, Brian Kelly, CEO of digital currency investment firm BKCM LLC, indicated that the figure of $5,900 may in fact be the price floor that many investors are looking for, stating that this is base cost of mining the bitcoin blockchain and that an incentive exists for miners to keep the price above that level.
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Last modified: March 4, 2021 5:09 PM