On Friday (September 2), hedge fund manager and CNBC contributor Brian Kelly (aka “BK”) shared his thoughts on the price action in the crypto market, and especially how Ethereum’s Merge upgrade might affect the $ETH price.
According to his bio on the CNBC website, Kelly is the founder and CEO of BKCM LLC, an asset management firm focused on “global macro and currency investing, including investing in digital currencies.” Furthermore, he is the portfolio manager of the BKCM Digital Asset Fund and the REX BKCM Blockchain ETF (NYSE: BKC).
Kelly is also the author of the book “The Bitcoin Big Bang: How Alternative Currencies Are About to Change the World” (which was published by Wiley in November 2014).
Kelly’s latest comments on crypto were made during a segment on Friday’s episode of CNBC’s “Fast Money” — hosted by Melissa Lee — at a time when Bitcoin was trading around the $20K level.
According to a report by The Daily Hodl, when Lee asked BK about the correlation between crypto and Nasdaq, BK replied:
“It’s been very high. Bitcoin correlation with the Nasdaq is somewhere around 60%. Ethereum correlation with the Nasdaq is somewhere around 70% for the rolling last 30 days… Crypto is effectively acting like a 2x-levered, triple-Q ETF [exchange traded fund].
“I think there’s some nuance here, in that Bitcoin itself is not a tech stock. It is definitively an alternative currency. It is digital gold and you need it when your country destroys its currency or like a lot of governments are doing today.
“Ethereum, on the other hand, can be somewhat thought of as a tech stock because it is going to disrupt a lot of what tech stocks are doing today. To the extent that it takes daily active users away from places like Twitter and Facebook and Google, I do think there is something to be said for Ethereum being a tech stock, but in general I don’t think crypto really bottoms until it breaks that correlation because otherwise why do I need it except for a leveraged play on Nasdaq.“
BK was also asked about Ethereum’s upcoming Merge upgrade — which marks the Ethereum network’s transition from proof-of-work (PoW) to proof-of-stake (PoS), and is expected to take place sometime between September 10 and September 20 — and how it might affect the price of $ETH.
BK said:
“I think it’s probably more ‘sell the news,’ which is maybe not that intuitive because in crypto you generally want to buy the news. But everybody has been buying Ethereum because they’re going into this merge and now you’re going to get a so-called yield. Just so you know, it’s not really a yield. You’re just getting your inflation rewards back, so it’s kind of offsetting the inflation in the currency. It’s not really a yield…
“There’s probably a higher potential for a sell-the-news event going into the merge. You could also have a technical glitch. Not only there could be a technical glitch, but there are a lot of questions about what the apps are going to do if Ethereum splits again...
“You could have a chain fork and now not one, but two or three different Ethereums. Then what does your DApp (decentralized application) go on and play on? I think that there’s more risk to the Ethereum merge than people are giving credit for.”
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