Significant Bitcoin Price Increase Expected Due to Mining Rewards Halving: Analyst

Brian Kelly, a prominent portfolio manager at the BKCM Digital Asset Fund, has argued that the cryptoasset industry is “starting to get” that highly anticipated institutional adoption.

Kelly, an MBA graduate from the Babson F.W. Olin School of Business, pointed out during CNBC’s Fast Money show (on May 21, 2019) that Fidelity Investments’ Digital Asset division is soon planning to roll out its custodial solutions for cryptocurrencies.

TD Ameritrade Invests In ErisX

He added that individual investors are “starting to buy” more crypto and giant financial institutions such as TD Ameritrade, the provider of one of the world’s largest online trading platforms, is increasingly investing in crypto-related initiatives.

According to its official website, the TD Ameritrade Holding Corporation has invested in ErisX, a Chicago-based trading platform focused on providing crypto-based spot and futures contracts. As confirmed by Kelly, ErisX’s management will soon start offering digital asset trading services through its institutional-grade exchange - mainly to retail customers.

Bitcoin Mining Rewards Halving Event Approaching

Kelly also mentioned:

The big picture here is that you’re starting to enter a cycle where you get a supply cut. Every four years, the supply of Bitcoin (BTC) gets cut in half. [Historically,] we generally have a rally a year into it and a year out of it. So, we’re just at the beginning of that stage. So, you’ve got this combination of a lot of demand coming in and we’re heading into a period where we’re gonna have a supply cut. This is generally very bullish for [Bitcoin.]

However, he cautioned that potentially crypto investors should “size the [situation] appropriately.” He noted that “while we’re down at these [price] levels”, only 1-5% of an investment portfolio should be allocated to bitcoin and other cryptoassets.

Investing Responsibly

Kelly explained that cryptocurrency investments are still “a risky thing” and that “when [Bitcoin] goes higher, and you buy it at the top, don’t tell [me] that [you] bought too much.” In other words, the experienced crypto hedge fund manager suggested that investors only invest as much as they can afford to lose.

Notably, Kelly revealed that he spoke to “a lot of miners” throughout the world and they told him that they “sold enough bitcoin to get [them] through the next year or so.” Having sold enough BTC to be able to sustain their operations, most of the miners will now be “hoarding” the world’s most dominant cryptocurrency. This, as they expect its value to increase significantly, Kelly said.

Bitcoin Use Nears All-Time High

On May 15, 2019, the bitcoin price surged to a 2019 high of $8,300 according to CryptoCompare data. Juan Villaverde, the Chief Analyst at Weiss Crypto Ratings, believes that bitcoin could be a “great buy”, although he appeared to suggest that the cryptocurrency’s price could still drop as low $4,400 (instead of surging in the short-term).

According to Villaverde, BTC is a good buy for the following reasons:

  • “The usage of Bitcoin is near all-time highs – 450,000 transactions per day. That’s up from a low of 150,000 in April of 2018 and approaching the all-time high of 490,000 in December of 2017.”
  • “Despite the high transaction volume, fees on the Bitcoin network are at their lowest levels since August of 2017 – more good news for users.”
  • “The Bitcoin block size is now greater than ever before, thanks to the Segwit technology upgrade.”