Despite the impressive gains that cryptocurrencies had during 2017, bitcoin remains ‘under-owned’ by institutional investors. Bitcoin, the world’s largest cryptocurrency by market capitalization, continues to rebound from its minimum levels reached last week. It is expected to return its peaks just in a couple of weeks by some experts.
Dan Morehead, the chief executive officer and founder of Pantera Capital, said to CNBC that the bear market is about to finish and a new bull run will come very soon.
“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.”
Morehead explained that institutional investors have barely even gotten involved in the market – leaving plenty of room for expansion. “There’s such an institutional appetite to get exposure to this. It’s a half a trillion dollar asset class that nobody owns,” Morehead said. He added: “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.”
Founded in 2003, Pantera Capital started its first cryptocurrency fund in 2013 and now it is an investment firm focused exclusively on ventures, tokens, and projects related to blockchain tech, digital currency, and crypto assets. Pantera Capital is invested in a number of leading cryptocurrency ventures, including Bitstamp, Korbit, Xapo, and Bitpesa. In 2017, the firm launched an ICO.
In December, Morehead predicted bitcoin’s fall by 50 percent before the next big surge. Now he sees Initial Coin Offerings as the most interesting investments, though his company trades the big guns like Bitcoin and Ethereum.
“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,” Morehead explained.
The head of Pantera Capital welcomes cryptocurrency regulations. He believes that regulation will ultimately help the market grow at a healthy pace.
“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,” Morehead said. “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”.
Bitcoin’s price rise can be enhanced by a novelty of CoinBase that announced its plans to launch SegWit for Bitcoin in the next few weeks. This implementation will make Bitcoin transactions cheaper and faster, which undoubtedly will be beneficial for the digital currency.
Dan Morehead is not the only person optimistic about bitcoin’s future. Ronnie Moas, Standpoint’s analyst, predicts that Bitcoin will hit $100,000. Well, time will show.