Speaking on CNBC’s Fast Money on Monday, professional cryptocurrency trader Brian Kelly shared his top three reasons as to why he believes Bitcoin’s price is finally bottoming.
Mining costs, price action
Kelly illustrated both the costs of mining bitcoin and the recent price action as reasons to believe the cryptocurrency is finding its price bottom. He explained that while Bitcoin saw new lows over the weekend, within ten to fifteen minutes there was a huge ramp up by one hundred or two hundred points. As Kelly noted, this is the action typically seen when Bitcoin has bottomed.
The bounce was accompanied by break-even costs for the leading market miners. ”USD 5,900 or so is mining costs. There’s an incentive for miners to keep that price about that level,” Kelly told CNBC.
Bitcoin’s relationship with USDT
With the demand for the controversial cryptocurrency Tether (USDT) increasing across Asia, and more Asian exchanges listing USDT over other continents, Kelly links this to a growing demand for all cryptocurrencies. He added that his own OTC desk is experiencing this trend, describing the use of USDT as linked with “global arbitrage”.
Monday saw the printing of USD 250 million worth of USDT, which Kelly used to validate his theory of a growing demand for cryptocurrencies. As the activities of USDT were recently verified as legitimate by a reputable US law firm, the injection into the market can be viewed in a positive light.
Kelly cited several current geopolitical issues affecting Bitcoin’s bottoming price, including in this discussion the recent fiat currency troubles in Iran and Argentina. As Bitcoin represents an alternative to fiat, its value generally increases when there are currency crises.
He finally predicted that the current trade war between China and the US is tangentially affecting the price, as the most likely outcome would be China devaluing their own state currency to remain competitive. This means that wealthy Chinese citizens may look into alternative places to store their money, with Bitcoin becoming an increasingly popular option.
Bitcoin News at the time of writing lists BTC at USD 6,180, down 0.91%.
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