Bitcoin fell on Friday because “everybody’s panicking,” but volatility in this market is actually quite normal, bitcoin bull Brian Kelly told CNBC on Friday.
The digital currency briefly dipped below $11,000 on Friday, down 44 percent from a record high hit at the start of the week.
“This is fear and greed,” the founder of BK Capital Management said in an interview with “Power Lunch.”
“What you had was some rumors that maybe Korea and Japan would be banning bitcoin again, and this happens very, very often. And so the herd panics, and the herd sells. And so far we’ve seen nothing of that, from what I can understand.”
Bitcoin soared above $19,800 on Sunday and was trading near $15,500 for much of Thursday New York time, according to Coinbase. On Friday morning, bitcoin dropped to a low of $10,400 on Coinbase. It had recovered above $13,500 by Friday afternoon.
The market action on Friday led to buying and selling being temporarily disabled for more than two hours on Coinbase, one of the biggest bitcoin marketplaces.
Kelly, who manages the BKCM Digital Asset Fund, said this is very early technology and therefore trading bitcoin is not for those looking to double some of their 401(k) money in a year.
“This is the deep end of the pool,” he said. “Tech is going to break. There are going to be trading halts, and there’s going to be extreme volatility.”
However, Kelly said, in the long run this is very healthy market action. In fact, he took advantage of the plunge on Friday to buy more bitcoin.
“Let’s wash out some of the weak hands, and let’s get back to the business of building up this tech.”