Bitcoin falls below $6,000. But crypto trader says it's 'not dead'

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Bitcoin falls below the $6,000 mark. But crypto trader Brian Kelly says the large cap crypto is "not dead."

Bitcoin fell below $6,000 on Friday, but bitcoin bull Brian Kelly told CNBC that the popular cryptocurrency is "not dead."

"This is not the funeral for bitcoin whatsoever," Brian Kelly, founder and CEO of BKCM LLC, an investment firm focused on digital currencies, said on " Fast Money " Friday.

"Let's put this in perspective," he said. "Do you know where we were a year ago? $2,500."

Kelly said a combination of things — including tax selloffs , multiple exchange hacks and about $10 billion funding initial coin offerings (ICOs) — have caused the coin, the largest by market cap, to fall in price.

Still, investors might not be so certain. The coin fell below $6,000 in February . But at its highs, in December 2017, bitcoin was priced around $19,500. That translates to a price decline of more than 60 percent.

While Kelly said the drop is "painful," he also said it's not unusual.

Cryptocurrencies are in a bear market right now, he said.

"And bear markets, we don't know where they end," Kelly said. "It doesn't mean that bitcoin can't go lower. But this is by no means the funeral for bitcoin."

Changing sentiment

Surprisingly, the lows might actually be a good thing for bitcoin, Kelly said.

"When we start to declare a funeral and things get really horrible, sentiment is approaching the lows," he said. "So hopefully, we'll use that funeral bug to say, 'Hey. You know what? That was near the lows.'"

And, multiple exchange hacks, including the recent hack on South Korea's Bithumb , forces regulators to make changes.

On Friday, a Japanese financial regulator ordered several cryptocurrency exchanges to improve business conditions to prevent future money laundering.

"Short run it's going to be a little tough, because they're stopping new accounts from coming in," Kelly said of Japan's Financial Services Agency led bitFlyer, the country's largest crypto exchange.

Case in point: bitcoin fell from around $6,400 to around $6,081 after the news broke Friday morning.

But Kelly said this is not a bad thing long term.

"They're cleaning up the system. They're making sure it's more robust. Making sure it's better for people," he said.

In addition, Mt. Gox , the Japan's bitcoin exchange that shut down in 2014 after a security breach, said it might start paying back investors as early as next year. Kelly this will likely happen in the first quarter of 2019.

"Everyone thinks all of the sudden there's going to be a wave of selling." But he said, it's "not happening now."

Instead, he said traders should think long term about cryptocurrencies and less about investing in ICOs.

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