CNBC’s Brian Kelly Explains Why Bitcoin Is Headed for a New All-Time High

Siamak Masnavi

On Wednesday (April 10), Brian Kelly, the founder and CEO of crypto hedge fund BKCM LLC, said that solid fundamentals are behind the "resurgence" of interest in Bitcoin (BTC), and explained why he believes that the Bitcoin price is headed for a new all-time high.

Kelly, on CNBC's "Fast Money" show, was asked by host Melissa Lee to explain what was behind the price of Bitcoin reaching levels this month that were last seen in November 2018. 

Kelly started by saying that there is "a really good chance" that the $3,200 level we saw in December 2018 is the bottom for "this cycle".

He then went on to talk about Bitcoin's improving fundamentals:

  • "Active Addresses" (number of active wallets): This is "one of the big metrics" he looks at. This is "up 26% from the January lows."
  • Transactions are "back to 2017 levels."
  • Fidelity is busy "rolling out" its "institutional platform."
  • CME Bitcoin Futures: The number of "large open interest holders" is at an all-time high and "continues to grow." (Kelly is correct that the CME Group saw "record volume" for its "Bitcoin futures"; according to Bloomberg, "CME Bitcoin futures hit a record 22,542 contracts traded on April 4, equivalent to 112,710 Bitcoin with a notional value of $546 million.")

Kelly then added:

"So, you are starting to see institutional investors come in here with a good fundamental tailwind, and that's got Bitcoin back in the saddle again."

Next, Lee asked Kelly if we will see the Bitcoin price hit "record highs". Kelly answered without any hesitation:

"Without question, this next cycle... You're talking a two-year cycle. So, generally speaking, in 2020, the supply of Bitcoin is going to get cut in half [Kelly is referring to the halving of Bitcoin mining rewards]. The cycle for Bitcoin is usually from about a year before to a year after. So, over this two-year period, you will likely get this big upswing, particularly if the institutions come in, and I think we surpass all-time highs."

Roughly a week earlier, on April 4, as CryptoGlobe reported, Thomas Lee, a Managing Partner and Head of Research at independent research boutique Fundstrat Global Advisors, was invited to an interview on CNBC's popular morning news and talk program "Squawk Box" to talk about the Bitcoin rally that started on April 2, and what it could mean for Bitcoin for the remainder of 2019. This is what he said about Bitcoin's fair value:

"So, if you were to take a combination of active addresses and activity per user, that's explained over 90% of Bitcoin since 2013. The fair value for Bitcoin, right now, is $14,000."


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Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.