Bitcoin’s bear market got you feeling blue? Well, cheer up! Dan Morehead, the founder and CEO of Pantera Capital, thinks the best is yet to come.
The Bear Cycle Is Coming to an End
Dan Morehead, the founder and CEO of Pantera Capital, went on CNBC’s Fast Money earlier this week, where he made some seriously bullish statements about Bitcoin and the cryptocurrency market as a whole.
Despite Bitcoin’s recent and sharp correction, Morehead thinks everything is ultimately right on track. Using history as an indicator, he claims Bitcoin’s severe drop in price is actually totally normal. Additionally, he predicts Bitcoin will start rising in the next couple of weeks, explaining:
We’re certainly aware that it’s a very speculative market. It’s volatile on the upside, but it can be volatile on the downside. But we’ve had a 64 percent fall from its peak to the trough a couple of days ago and that’s actually exactly the average decline in the Bitcoin market over the last seven bear-market cycles. So—the past doesn’t predict the future—but it seems like this is about the right [correction]. The other stat to note is that it typically has had on average a 71 day bear market and we’re 52 days into this. So it seems like another couple of weeks and everything will be kind of normal and it could start grinding back up.
Aside from sharing his expectations that Bitcoin and the cryptocurrency market will start to climb by the end of February, Morehead additionally explained that institutional investors have barely even gotten involved in the market – leaving plenty of room for expansion. He explained:
There’s such an institutional appetite to get exposure to this. It’s a half a trillion dollar asset class that nobody owns. That’s a pretty wild circumstance. And it’s also only got a 0.1 percent correlation to the rest of the financial markets… And Bitcoin is still so under owned by institutional investors that it trades kind of at its own beat.
More institutional investors in the future correlate to significantly higher market caps, so claiming Bitcoin is “under-owned” should get long-term cryptocurrency investors excited.
Morehead also shared his thoughts on regulation. He believes the US has done a commendable job thus far and thinks more regulation will ultimately help the market grow at a healthy pace, explaining:
[Regulation is] a good thing. I think the US regulatory bodies have done an excellent job. The IRS ruled on Bitcoin many years ago that it was property and so you get long-term capital gains tax treatment if you hold it for a year . The CFTC’s been very progressive about this and now we have CME futures on Bitcoin. And the SEC’s ruled a few things are securities and should be registered but in general has allowed the market to develop. The pace so far has been very good from the regulatory bodies, and a little more regulation is probably helpful.
Before signing off, Morehead also shared his opinion on what the most interesting investments at the moment are. Though his company trades the big guns like Bitcoin and Ethereum, he’s most intrigued by Initial Coin Offerings, explaining:
For my mind the most interesting bid are the new protocol tokens — ICOs as they’re called — because they’re kind of like the small caps of the industry.
After a pretty tough start to the year, Morehead’s bullish statements on Bitcoin are a welcome reminder that corrections are normal, and we’ve ultimately only just begun.
Do you think Morehead is right when he says Bitcoin should start “grinding” back up again in a couple weeks, or do you think we’re still stuck in a bear market? Let us know in the comments below!
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