The Bitcoin price is up by more than 2.52% today as cryptocurrencies attempt to stage a comeback. BTC is trading at $37,585, which is about 25% above its lowest level on March 21. It is still in the same range it has been in the past few days. Its market capitalization is at $699 billion, which is substantially below its all-time high of more than $1.3 trillion.
Analyst thinks Bitcoin price will surge
In an interview with CNBC, Brian Kelly, the founder at BKCM, said that he believes that the currency is setting up for what could be a long bull run. BKCM is an asset management firm that focuses on digital assets.
He cited the fact that there has been a divergence between Bitcoin prices and address growth. In the past few weeks, the prices of BTC has dropped by more than 42% while the number of addresses has remained flat. He also cites March 2020 when the same divergence happened as the pandemic started.
In the aftermath, Bitcoin staged a major rally that pushed its price from less than $4,000 to almost $65,000 a few weeks ago. Asked about his conviction, Kelly said:
“I actually added our Bitcoin investments this month because I believe this divergence is such a huge opportunity. We are long BTC and getting longer and what I would like to see is some momentum.”
You can watch the entire interview below.
BK is not the only fund long Bitcoin
Brian Kelly is not the only fund still bullish on Bitcoin. Elon Musk has said that Tesla continues to hold its Bitcoin investments. Similarly, MicroStrategy has also said that it will not sell its currencies.
And in a recent interview with Bloomberg, Cathay Wood of Ark Invest said that she believes that Bitcoin prices will keep surging in the longer term. Her firm is one of the biggest holders of Coinbase, the biggest publicly traded cryptocurrency exchange in the world.
Still, some analysts are a bit bearish on Bitcoin. On Monday, we wrote of an analyst who believes that BTC prices will crash by about to drop by about 42% to $20,000.
Bitcoin key risks
In my view, Bitcoin prices faces key risks. First, there are regulatory risks as the number of ransomware attacks rise. Last month, we saw the Colonial Pipeline hack and this week, the biggest meat company in the US was also hacked, pushing beef and pork prices higher.
Therefore, since Janet Yellen believes that the government should curtail the currency, we can’t rule out stricter rules. In a recent article, a Wall Street Journal writer made the case of banning the currencies, saying:
“A sober assessment of cryptocurrency must conclude that the damage wrought by crypto-fueled ransomware vastly outweighs any benefits from cryptocurrency.”
Other countries like Turkey, India, and China have already announced plans to ban or curtail Bitcoin and other cryptocurrencies.Second, Bitcoin prices also face interest rate risks now that the labor market in the United States is tightening while inflation is rising. As I wrote, the risk of high rates remains high and could drag BTC prices lower. But I also noted that the currency will likely thrive after the initial sell-off when the Fed starts to tighten.