The Bitcoin price has slid around five percent in the past week and bears are continuing to test US$10,000. Experts believe a sustained break below support at $9,800 could signal a further price slide.
Professional crypto investor and author of ‘The Bitcoin Big Bang’, Brian Kelly, has changed his tone after recently being extremely bullish on the near-term price of Bitcoin.
Kelly now says he believes the Bitcoin price has got “a little ahead of itself” because active daily Bitcoin addresses have lagged the Bitcoin price.
— CNBC's Fast Money (@CNBCFastMoney) August 22, 2019
“We had this huge run-up to $13,000 and now we’ve pulled back and part of the reason why is the fundamentals haven’t really supported the reasons why we went up,” he told CNBC’s Fast Money.
“Since the end of June, end of July, you’ve seen a drop-off of active daily addresses, you might want to think of these as MAUs (monthly active users) or DAUs (daily active users) for a social network.
“In the short term, I’m a little bit cautious”.
But long-term, Kelly remains extremely bullish and believes a ‘generational opportunity’ to buy Bitcoin might not be far away.
“In December and January we saw the price continue to crash down and the activity on the network was really increasing, so that’s probably the biggest thing I’ll look for.
“Second thing is kind of the sentiment in terms of, alright doesn’t everybody think Bitcoin’s dead again… When people start saying that, then I’ll get real bullish.
“For you to buy Bitcoin that’s going to be a generation buy at that point.”
Volatility likely to subside
Bloomberg Intelligence Senior Analyst, Mike McGlone, this week said he believes Bitcoin is in a consolidation phase and has echoed some of Brian Kelly’s comments about the recent rally.
“It’s just basically retracing the big bear market from 2018 but it went too far too fast, it’s up around 200% for the year,” he told Bloomberg this week.
McGlone believes Bitcoin’s volatility will soon become significantly lower, making the cryptocurrency a more attractive store of value and comparable to gold.
“Volatility is a key thing, volatility in Bitcoin is virtually guaranteed to reach new lows.
“If you look at the 180-day volatility, the low at 180-day volatility is around 40%, that was October of 2015. That marked the bottom in the mark and then it took off.
“But with more and more vehicles coming in this space, with Bakkt and futures and all other ways for people to get involved in Bitcoin, that volatility is virtually guaranteed to get suppressed, which I think it’s what it’s doing now.
“It’s put in a pretty good low for the year, good supports around $8000, pretty good resistance around $20,000, it could be stuck in that range endlessly, which should push volatility lower, which makes it more like gold, to me that’s what’s happening.
“The key thing I watch is transactions and addresses used and those things that really signalled bear markets last year were bullish this year and now they’ve really curtailed, it says to me we’re in extended hibernation in the price of Bitcoin.”