Buy Bitcoin while prices are low, advises asset manager

Buying Bitcoin now, while the prices are low and commentators are claiming the asset class has had its day in the sun, could be a wise move.

This is according to Brian Kelly, the founder of BK Capital Management, who claims that the naysayers could be wrong and that alternative investors could be in with a chance of making a fortune if they are willing to take a chance on the cryptocurrency while the future is far from certain.

Speaking to CNBC’s Fast Money last week, Kelly stated: “Now, when everyone is saying … it’s over, that’s it, bitcoin is dead, for the 175th time. Now’s the time you start looking at it, on the buy side.”

The asset manager, who oversees the BKCM Digital Asset Fund, warned investors that the currency is definitely volatile and that buying when prices are high is far riskier than buying now, despite what your instincts may tell you. He explained: “When we talk about bitcoin being up at USD$20,000, everyone is running around being all excited,” he said. “Those are the times to be a little cautious.”

Kelly went on to add that, as a result of uncertainties over how currencies like Bitcoin are regulated in China and in South Korea, investors in the US and Europe are able to buy bitcoins from Asian retail investors for good prices, during what he calls a ‘hand-off’ period.

When asked about the fact that the price of bitcoin had fallen so rapidly from highs of around USD$19,500 in mid-December to around half that amount, Kelly said that the price drop was “healthy,” and that it helps those with staying power to make money over the longer term. He explained: “You shake out the weak hands. You get strong hands in there.”

Alongside his advice to buy Bitcoin while its price and its reputation, to some extent, is weak, Kelly offered three golden rules for alternative investors looking to take a risk on cryptocurrency investments: Rule one is not to risk more than 1-5 per cent of a portfolio. He explains that an asset in its infancy represents the potential for enormous growth but also for large losses. If investors only invest a small proportion of their portfolio, taking the plunge becomes less risky.

His second piece of advice is against selling off cryptocurrency assets too soon. “Once there’s momentum, you hold onto this thing,” he stated.

His third golden rule is not to panic when the price of a chosen currency falls dramatically. He explains that volatility is the nature of this type of investment and that digital currency prices “can move 20 percent to 30 percent in a day.”

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