This interview has been edited and condensed.
The author of the “The Bitcoin Big Bang — How Alternative Currencies Are About to Change the World,” Brian Kelly calls himself an optimist when it comes to the future of the cryptocurrencies. CNBC’s prominent commentator, who is also the founder and CEO of digital currency investment firm BKCM LLC, analyzes markets on an everyday basis and tends to be 50 percent right “trading-wise.”
We met with Brian Kelly at the Crypto Finance Conference in Switzerland and talked about Bitcoin ETFs, the next financial crisis, and the best and worst jobs at the same time.
Catherine Ross: The most obvious question to you is, what is 2019 going to look like for the crypto industry?
Brian Kelly: That’s a great question! The trillion dollar question. I think it’s going to be better than 2018, which is a pretty low bar.
CR: In terms of what?
BK: As an investor, my number one concern is price. I look at the price and I say that we’ve seen three or four of these kind of boom-and-bust cycles in Bitcoin. If you look at the most recent two or so, we’re following roughly the same path as we’ve had, which means we’re somewhere closer to the end. We might have another dip lower — it wouldn’t surprise me at all.
CR: Lower that $3,000?
It wouldn’t surprise me if it [Bitcoin’s price] went to $1,500.
CR: And you feel it’s going to be short term?
BK: I think very short term. And I think we’re coming to an end. Here’s the thing, the sellers that we’ve seen recently are almost forced sellers. Some CEOs had to raise cash because they say they “can’t hold it in crypto all the time.” These are signs of the end. I don’t know if it [the end of the cycle] is here or it’s a little bit lower, but those are the signs of the end.
In 2019, if I’m looking at it, the focus will be on the currency — Bitcoin, Litecoin, some of those — because we have quite a bit of geopolitical tension in the world.
CR: And you feel it is contributing to the price?
BK: Yes. We’re starting to see some global macro players use Bitcoin as an alternative to their gold position or as a way to hedge against fiat currency fluctuations and volatility.
CR: Using Bitcoin instead of gold?
CR: But is it stable enough?
BK: No (laughs).
But they’re not looking for stability, right? They’re looking for a safe haven that’s uncorrelated to every other asset. So, for an investor and a speculator, the stability is actually not what you want.
You want that volatility because you’re trying to get good returns. You’re trying to get something that’s uncorrelated to everything else. And that persists through 2019, and it starts to get to be more of a quote-unquote mainstream asset within the investment community.
One of the most anticipated events in the crypto industry is the approval of a Bitcoin ETF, which hasn’t happened yet, despite the numerous attempts. Last year alone, companies and institutions like the NYSE, VanEck, SolidX, Proshares and internet entrepreneurs the Winklevoss brothers (whose first attempt in 2017 failed) all filed with the United States Securities and Exchange Commision (SEC), but were rejected or are awaiting a decision.
The most recent development on the matter is the SEC’s review of a NYSE Arca’s Bitcoin ETF rule change proposal on Feb. 11. The proposal suggests “to list and trade shares of the Bitwise Bitcoin ETF Trust under NYSE Arca Rule 8.201-E.” This might end up being positive for the market, given the latest statement from SEC Commissioner Robert J. Jackson Jr. Speaking to Washington D.C.-based publication Roll Call on Feb. 6, he said, “Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.”
CR: One more very important question for you — will there be an ETF in 2019?
BK: No shot.
CR: I’m going to put that in the headline! “No shot for an ETF in 2019,” says Brian Kelly.
BK: That’s fine! I would bet against it. I don’t think it’s going to happen this year. There’s too much unresolved that is going to take longer than a year to resolve and before the SEC gets comfortable with what’s going on.
CR: What kind of time frame are we talking about?
BK: I think 2020 is a very good shot.
CR: Sounds promising! But major companies, like ShapeShift and Consensys had to lay off a lot of employees recently. What does this indicate?
BK: This is a part of the maturation process. We all got caught up in the big bubble. That being said, this is just a very natural part of the process. There are, unfortunately, some very good people that had to be laid off just because of market circumstances.
It doesn’t feel great right now, but it will make the industry stronger.
CR: From the trading point of view, what are the major signs or indicators of bullish and bearish markets?
BK: You look at the bottoms and the tops.
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