Hedge fund manager Brian Kelly says the rising number of institutional investors owning bitcoin is due to the digital currency’s core value proposition: a fixed coin supply. On the other hand, the same institutional interest of investors helps to build confidence in the top cryptocurrency while removing some of the perceived risks.
Bitcoin value proposition
Kelly’s comments follow reports that the European Central Bank (ECB) wants to issue its own digital currency. Speak in one interviewKelly, the founder of BK Asset Management, rejects the idea that a digital currency issued by the central bank poses a threat to bitcoin.
Kelly notes that China and the US have similar plans and is quick to point out that none of the digital currencies issued by the central bank can match bitcoin’s value proposition. Kelly explains:
I cannot imagine the ECB issuing a digital currency with a fixed offer. I would even think that it (digital euro) will make it a lot easier for them to print more money digitally.
In addition, he says it is this creation of surplus money by central banks that “poses risks to holders’ fiat currencies.” Creating surplus money highlights why bitcoin (BTC) is seen as ‘digital gold’.
Bitcoin versus gold
However, when asked about his bitcoin price prediction, an elusive Kelly explains what will likely happen first before the top crypto makes its biggest breakthrough. He says:
Bitcoin has been above USD 15,000 for more than 12 days throughout its history. I suspect some people who bought in late 2017 and 2018 might want to get out. So I wouldn’t be surprised to see a relapse.
Still, the fund manager says he won’t be surprised if the value continues to rise in the “longer term”. Bitcoin, which is trading above $ 16,150 at the time of writing, has a total market value of more than $ 300 billion. In contrast, the total value of known gold stocks is $ 9 trillion, a figure that eclipses bitcoin’s total market value several times over.
Without being specific, Kelly says the current disparity between bitcoin and gold prices means there is “a lot of room for upside potential.”
Major merchants double down on CME
Meanwhile, Kelly’s strong claims that institutional investors are heavily involved in bitcoin backs up the latest weekly report by Arcane Research. According to the report, the number of major bitcoin traders on the CME has “more than doubled this year” as outstanding interest approaches nearly $ 1 billion.
Arcane Research cites a report from the Commodity Futures Trading Commission (CFTC) featuring nearly 100 major traders holding bitcoin contracts on CME. This contrasts with the year 2019 when there were only 45 such large traders.
The report concludes that “this may be one of the best indicators of an increase
institutional demand for bitcoin exposure. “
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