Bitcoin rallied on Monday after falling below $ 6,000 on Friday. But blockchain venture capitalist Spencer Bogart, who considers himself "super optimistic in cryptography right now," told the CNBC media network that prices will likely fall again.
"If we go back to the summer of 2017, when encryption prices were booming, there were around 200, maybe 300 new crypto hedge funds that were formed," said Bogart, a partner at Blockchain Capital in San Francisco to "Fast Money." Monday.
Bogart explained that a year later, many of these funds are "reaching their limit" which is effectively one year. That means that with the price of several cryptocurrencies below 50%, the people who act as intermediaries between the seller and the exchange, seek to sell.
"They're saying," hey, I want to exchange me for that fund, "Bogart said. "That means a forced sale on behalf of all these new cryptographic funds that have emerged. I think that could cause prices to go down artificially. "
Bitcoin, which fell below $ 6,000 on Friday for the first time since February, hit a record high of $ 20,000 in December last year. That represents a fall of almost 70%. And it's not just Bitcoin; Ethereum, Litecoin, Bitcoin Cash and Ripple have fallen in considerable percentages during the year.
But investors were optimistic on Monday when the digital currency recovered slightly, around $ 6,254 per token on Monday at 5:30 p.m. ET.
Brian Kelly, CEO of BKCM LLC, an investment firm focused on digital currencies, said it was still early, but added that he saw the first signs that Bitcoin would reappear on Monday, including "a large amount of demand from Asia."
"We saw Bitcoin reach new lows, I think we went to $ 5,779," Kelly said in "Power Lunch" on Monday. "And then, in about 10 or 15 minutes, it had a great acceleration, hundreds, two hundred points, and that's typically the action that Bitcoin has shown in the funds."
Kelly said that $ 6,000 is the cost of extracting the underlying blockchain technology and, therefore, "there is an incentive for the miners to keep that Bitcoin price above that level."
Bogart said that many ICOs, or initial offers of currencies - a method of crowdfunding to raise funds for cryptocurrency companies - currently on the market are overvalued. But he pointed out that the price of Bitcoin is "pretty good at the moment" if investors think in the short term.
While some investors are waiting to see if Bitcoin will fall further before buying, Bogart does not think it's a good strategy.
"Most people who will expect lower prices will end up paying higher prices than they are today," he said. "Therefore, I believe that the correct step is not to try and measure market time and try to average it."
At the time of writing the first cryptoactive has a mark of 6140 USD per token, which represents a fall of approximately 3% in the last 24, according to the price index of CoinMarketCap.
As Bogart said, it is unlikely that Bitcoin will go down further, so it is advisable for those who plan to invest, buy now that a stable floor is maintained below what the BTC averaged during the year.
Source: CNBC