On Wednesday (February 19th), Spencer Bogart, a partner at blockchain-focused venture capital (VC) firm Blockchain Capital, said during an interview that this was a great time to buy Bitcoin (BTC), and proceeded to explain why.
Blockchain Capital, which is headquartered in San Francisco, was founded in 2013. Its portfolio include investments in Abra, Bitfury, BitGo, BitPesa, Bitwise, block.one, Blockstream, Coinbase, Kraken, Messari, Ripple, and Xapo.
Bogart’s comments came during an interview on Bloomberg Television with anchor Emily Chang and Mike McGlone (a Senior Commodity Strategist at Bloomberg Intelligence) on a day when Bitcoin was hovering around $4,000.
The segment started with McGlone explaining that Bitcoin might be back in the short term but that he did not believe that Bitcoin had bottomed yet:
“If you look at the major indicators, I like to watch NVT ratio, transactions, volatility, all these things that have been synonymous with bottoms in the past, they show that the market is far away from a typical bottom you'd normally see.”
For example, with regard to volatility, McGlone currently sees it at around 65%, whereas he feels that normally you would see a bottom when volatility is in the 15–20% range.
Chang started by asking Bogart if he would like to disagree with McGlone’s bearish outlook for Bitcoin. Bogart replied:
“Well, listen, Bitcoin never left; it's always been here. So, is it back? It's definitely back. Are we ready to see new all-time highs? Probably not yet. I still feel there's a few more regulatory shoes to drop, but for now, the entrepreneurial activity and the institutional interest in the space has not ceded with the price.”
Chang then asked Bogart if he believed that Bitcoin had already hit a bottom. Bogart answered:
“I think now is a very good time to buy. Is it the absolute bottom? I'm not sure.”
Bogart then was asked to elaborate on his earlier comment about continued entrepreneurial and investor interest in Bitcoin during the “slump”, which he did:
“It hasn't slumped at all in terms of entrepreneurial activity… We see more and more companies coming in every day, and the higher quality entrepreneurs as well… I think there is a strong case to be made that Bitcoin is the most compelling asset in the world right now.”
Bogart next explained where additional demand for Bitcoin would be coming from:
“I think there's three main buckets of demand going forward.”
He then explained these three sources of demand. The first is “passage of time.” The longer that Bitcoin continues to stay alive, the more it goes from being something “scary and unknown” to something “trusted and proven.” The second is “central banks and institutions.” These view Bitcoin as a “non-sovereign digital asset with absolute scarcity.” And the third is “tech demand,” i.e. demand for Bitcoin as “programmable money.”
On 17 December 2018, in an interview with CNBC’s Fast Money about Bitcoin, Bogart was asked by anchor Melissa Lee why people should “believe the bull case from here” if we don’t understand “what was wrong about that thesis that brought it to $20,000.” Spencer replied:
“There’s absolutely nothing wrong with the thesis. The problem is just that up until very recently Bitcoin has been a market that is almost entirely driven by retail, which is very unique, and what does that mean? Well, it means that in bull markets, we go a little bit too high, and in bear markets, we go too low. So, that’s where we are right now. The reality is that the fundamentals have not changed.
I mean, 2018 has been a fantastic year for Bitcoin. Ignore the price… This is the first year that we started to move to scale Bitcoin with the Lightning Network, where you can transact extremely quickly and extremely cheaply. And meanwhile, the institutionalization of the asset class and the ecosystem itself are really only getting stronger. I mean, we have seen endowments like Yale, Harvard, and MIT move into the space. We’ve seen Nasdaq and the New York Stock Exchange’s sister company Bakkt start to move into the space with Bitcoin derivatives. We’ve seen qualified custodians move into the space. And lastly, probably the most encouraging thing, is the quality of the talent that we are seeing enter the space.”
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