On Wednesday (14 November 2018), Brian Kelly, the founder and CEO of digital asset investment firm BKCM LLC, explained yesterday’s “Crypto Market Meltdown”, which led to double-digit percentage losses for most of the major cryptocurrencies including Bitcoin, which sank to $5,569, its lowest price in over a year.
Yesterday, Kelly, on CNBC’s “Fast Money” show, was asked by host Melissa Lee to explain the reasons for the crypto markets going into “meltdown mode.”
Kelly started by pointing out that Bitcoin Cash (BCH) was about to a “hard fork”, i.e. an update to the protocol software “such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid,” which means that “all nodes meant to work in accordance with the new rules need to upgrade their software.” And if “one group of nodes continues to use the old software while the other nodes use the new software, a split can occur.”
“Now, when you do a software upgrade, everybody usually agrees, but in this particular case, everybody is not agreeing about what that software upgrade should be. So, we’ve got ourselves a Crypto Civil War… and that has people in the market concerned.
So, what happened today? People are concerned that both Bitcoin and Bitcoin Cash networks might slow down, they might not work as well, that software upgrade might not go through, or if it does go through, we’ll end up with some chaos.
People started selling. That triggered stops. Everybody got concerned. And that’s what happened today.”
However, Kelly himself was not worried:
“In my view, very short term type of event. I think it’s probably an opportunity. In fact, we did some buying at my fund today.”
“Absolutely… We had six months of Bitcoin and a lot of other assets trading sideways, and I think there were just a number of events that piled up that led to this mass release, the sell-off… My view is that it’s probably some institutions, some funds, deleveraging, taking some money off the table. Any time there are forks, things tend to trade weird and strange. So, I think people are trying to take some risk off the table. There are a number of exciting events coming up. In December, ICE’s new subsidiary, Bakkt, is going to launch… And then, in January, we’ll see Fidelity new crypto custody arm starting to operate.”
According to data from CryptoCompare, BTC is currently trading at $5,637 (down 1.81% in the past 24-hour period) and BCH is trading at $444.89 (down 8.74% in the past 24-hour period).
The Bitcoin Cash hard fork is scheduled to take place on November 15th 2018 around 16:40 UTC.
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