12 Feb Why bitcoin will roar back within several weeks?
Dan Morehead, CEO of hedge fund Pantera Capital is big on bitcoin. So big in fact that his hedge fund invests solely in cryptocurrency and blockchain technology assets.
Founded in 2003, Pantera launched its first cryptocurrency fund in 2013, earning returns as high as 22,000%. The company’s ICO and a digital asset fund have each returned 598% and 188% respectively and Pantera now has more than $2 billion in assets under management.
The best part is Morehead expects bitcoin to bounce back within several weeks.
Rebound just weeks away
Interviewed on CNBC’s Fast Money, he says:
“We’re certainly aware it’s a very speculative market. It’s volatile on the upside, and it can be volatile on the downside. We’ve had a 64% fall from its peak to its trough a couple of days ago and that’s exactly the average decline in the past cryptocurrency bear markets. The past doesn’t predict the future, but it seems like this is the right downdraft.
The other stat to note is that typically it has had on average, a 71-day bear market and we’re 52 days in it. So, it seems like another couple of weeks, and everything will be kind of normal and it can start grinding back up.”
Institutional market interest building
Morehead says there’s a big institutional market appetite to get exposure to cryptocurrency. “It’s a half-a-trillion-dollar asset class that nobody owns. That’s a pretty wild circumstance. And it’s also got a 0.1% correlation to the rest of the financial markets.”
Regulations are positive
He views cryptocurrency regulations as a good thing.
“US regulatory bodies have done an excellent job. The IRS ruled on bitcoin many years ago that it was property and you get long-term capital gains tax treatment if you hold for a year. The CFTC’s been very progressive about this and now we have the CME futures on bitcoin. The SEC’s ruled a few things are securities and should be registered, but in general, it’s allowed the market to develop. The pace from regulatory bodies has been good so far and a little more regulation is probably helpful.”
What’s your biggest interest in cryptocurrency?
The big currencies are interesting to trade, Morehead says but of biggest interest to him are “the new protocol tokens, ICO’s as they’re called, cause they’re kind of like the small caps of the industry.”
Morehead’s analysis of past downturns make him big on bitcoin in the short-term. Where do you think the market is headed in the short-term and what’s ahead for the end of the year?
You can view Morehead’s upbeat cryptocurrency predictions on CNBC’s Fast Money here.
Visuals courtesy CNBC, Pixabay.