Brian Kelly, a long-time contributor to CNBC’s Fast Money and the founder of BKCM, has laid out three major factors that could fuel the next big rally of bitcoin, now that the bitcoin price has officially crossed the $10,000 mark.
According to Kelly, three major factors that will inevitably lead the bitcoin price to the next support levels at $12,000 and $14,00 are the entrance of banks such as Goldman Sachs, clarity from regulators on bitcoin’s legality, and the initiation of the blockchain week in New York on May 14.
Earlier this week, as reported by CCN, Goldman Sachs has officially confirmed that it has begun the development of its cryptocurrency trading desk, which will allow the bank’s clients to invest in bitcoin and the cryptocurrency market. Executives at Goldman Sachs stated that the growing demand from clients for bitcoin as an alternative store of value led the bank to support bitcoin trading.
Rana Yared, an executive at Goldman Sachs, said that despite the skepticism towards bitcoin by the bank’s executives, the company came to a decision to embrace bitcoin due to overwhelming demand from clients.
“I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world. For almost every person involved, there has been personal skepticism brought to the table. It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value,” said Yared.
Sharing the same sentiment as VISA executive and Bitcoin Foundation founder Jon Matonis, Kelly said that major investment banks like Goldman Sachs can provide significant liquidity to the market and introduce cryptocurrencies as a new asset class to investors in the traditional finance sector.
“I think it’s fabulous that they’re getting into it because it brings in new liquidity. They’re going to develop futures markets, options markets — I even think you’re going to start to see interest-rate markets around bitcoin. We’re used to hearing things about Libor, the index for bitcoin interest rates is Bibor,” said Matonis, emphasizing that an increase in the number of publicly tradeable instruments of bitcoin will allow the cryptocurrency market to mature.
Recently, as non-profit organization Coin Center announced, the US Securities and Exchange Commission (SEC) also offered clarity on the legality of bitcoin and stated that bitcoin cannot be considered a security.
SEC chairman Jay Clayton explained that bitcoin is a medium of exchange and a cryptoasset, and most people have described bitcoin as a currency rather than a security because it does not benefit a single organization, institution, or a company.
“It’s a complicated area. Because, as you said, there are different types of cryptoassets. Let me try and divide them into two areas. A pure medium of exchange, the one that’s most often cited, is Bitcoin. As a replacement for currency, that has been determined by most people to not be a security,” Clayton noted.
On CNBC’s Fast Trader, Kelly noted that these three factors will enable the bitcoin price to climb up past $10,000, and potentially achieve major support levels in the short-term.