Pantera Capital CEO Dan Morehead says that Bitcoin (BTC) has reached a turning point after making it through a lengthy bear market.
In a new update, Morehead says that after the collapse of Terra and crypto exchange FTX, the industry has felt enough pain to get ready for a bull market.
“Having traded 35 years of market cycles, I’ve learned there’s just so long markets can be down. Only so much pain investors can take. It’s been a full year since TerraLUNA/SBF/etc. It’s been enough time. We can rally now.”
According to the CEO, digital assets have decoupled from traditional markets, and so any future weakness in equities or bonds may not matter as much for crypto as many analysts believe.
“Blockchain has massively decoupled. It’s just hard to notice in the moment.
For most of the history of blockchain assets, they had essentially no correlation to risk assets. Using Bitcoin as a proxy for blockchain, the correlation with the S&P 500 over its first nine years of existence was 0.03. That was a huge part of the argument: when you find a new asset class with incredibly high historical returns and essentially no correlation with typical assets – that’s the dream investment.
Unfortunately, all of the excessively-leveraged centralized entities and the alleged criminal Sam Bankman-Fried in our space caused the correlation to spike up, peaking at 0.76 last year. As blockchain is in no way connected to interest rates, it should have a very low correlation to the main asset classes (stocks, bonds, real estate), which are all tightly driven by rates. Bitcoin’s correlation with the S&P 500 is back to below 0.1.”
In statistics, a correlation coefficient of one suggests that assets are very likely to move in tandem with each other. Meanwhile, a correlation value closer to zero suggests that the assets have a minimal linear relationship.
Morehead says that Pantera, which according to him is up 41,960% since inception, is expecting one catalyst to send Bitcoin soaring to new heights.
“There is something that might be even better than Pantera Bitcoin Fund for some investor types: a BlackRock ETF (exchange-traded fund).
If approved, we anticipate a significant impact to crypto similar to the launch of BlackRock’s iShares Gold ETF in January 2005, which coincided when gold was trading at $423 per ounce. Today, the price of gold stands around $1,950 per ounce. Many economic factors have influenced the price of gold, but the launch of an ETF certainly played an influential role in its rise.”
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