CNBC contributor Brian Kelly is assessing Bitcoin’s value after its recent drastic sell-off.
Ultimately, says Kelly in a new CNBC interview, the reasons to invest in Bitcoin remain intact despite this week’s dramatic price plunge.
[adinserter block="1"]He calls Bitcoin tumbling from around $45,000 to slightly above $30,000 in a matter of hours a “mechanical sell-off.” Kelly remains bullish on BTC’s overall trajectory and says he’s a buyer.
“On days like today, I always ask myself, ‘Has my thesis broken?’ And for me what’s driving this Bitcoin market, is institutional adoption and a hedge against currency debasement…
So I have to say no, my thesis isn’t broken. This is just a mechanical sell-off that got exacerbated and I want to be a buyer.”
According to Kelly, the Bitcoin crash is largely due to a deluge of liquidations in the options market and the resulting high volumes that brought some exchanges to a crawl.
“Primarily the biggest part of this sell-off was due to margin calls and liquidations. And the exchanges couldn’t handle the volume – they effectively stopped trading and it just cascaded down.”
Kelly also suggests that China’s move to ban financial institutions from offering crypto-related services, a move which preceded the crash in Bitcoin’s price, is motivated by the world’s most populous country’s plans to ensure successful uptake of the digital renminbi (RMB).
“What China did actually probably is more predicated on the fact that they are launching their central bank digital currency (CBDC), the digital RMB. And so they wanted to make sure that there was nobody out in the channels, that everybody is going to use the digital RMB.
Once they have the digital RMB, there’s no reason why they couldn’t turn these things back on. It just happens to be that the ramp into it is the digital RMB as opposed to something like Tether (USDT).”
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