Dan Morehead, CEO, and Co-CIO of cryptocurrency investment company Pantera Capital has expressed his opinions on Bitcoin’s price movement in 2022 and beyond.
Morehead made the remarks last Friday during an interview with Yahoo Finance’s Brian Chung (March 25). Chung began the conversation by inquiring about the Pantera Capital CEO’s assessment of Bitcoin’s price movement so far in 2022.
Morehead responded as follows: “Bitcoin has gone through some fairly crazy cycles in the nine years I’ve been investing in it. It has had six bear markets, with an average loss of nearly 60%. This one was fifty percent. And I believe that when institutions enter the sector, all of those cycles will reduce, mercifully, and that a 50% bear market is likely to be all that exists moving ahead.
“I believe we are either near or very close to the bottom. And another thing we’ve observed historically is that when there’s been a tremendous gain, like there was from 2013 to 2017, the market often peaks around January 1st and then gradually declines towards tax day… and then the market may begin to function.
“The third factor that has influenced it significantly is that, although Bitcoin and cryptocurrencies have historically had a poor correlation to asset classes over extended periods of time, during really pressured situations, when the S&P is used as a proxy for risk, it has fallen quite a little. There have been six of them since Bitcoin began trading, and the average is that correlation is very strong for 72 days and then declines over time, and all of those factors together make me really positive right now. Markets, I believe, will decouple. I believe equities and bonds will continue to decline for years, while blockchain assets may appreciate.”
Chung then inquired as to why the cryptocurrency market saw a “savage slump” in February. Morehead responded: “I believe the primary macro narrative here is that the Fed is much behind the curve, and it will have to hike rates significantly more than has been discussed. We said in our investor letter dated December 7th that it was a Ponzi scam. The Fed had manipulated the bond market. They had inflated the value of bonds by 15 trillion dollars beyond their 50-year real interest rate price, anticipating that this bubble would burst shortly, as it did. Bond yields have increased by a hundred basis points since we forecast that.
“What we did not anticipate was that this would have a significant negative effect on blockchain. Thus, when you trade and something goes against you, you are either incorrect or premature, and I believe that the markets are incorrect in this situation, and blockchain will decouple from other asset classes. Consider that increasing rates are theoretically negative for bonds. It also has a negative effect on other assets with discounted cash flows, such as shares or real estate, but blockchain is completely rate-independent.
“So, six months from now, I see ourselves in a situation where traditional asset markets continue to struggle and blockchain returns to its regular 2.5X annual growth rate that it has maintained for 11 years.” When questioned about his estimate for the price of Bitcoin a year or two from now, Morehead stated:
“We’ve been doing this for a long time, and Bitcoin has increased 2.5X on average over the last 11 years, and it sometimes gets ahead of itself and forms a bubble, or it enters a bear market, like it is now. And right now, I see a regression of 60% below that 11-year trend. Thus, our typical projection is that we will be 2.5X higher a year from now. This equates to around $100,000 per Bitcoin. And, despite the fact that that number seems to be irrational. I believe that is very likely to occur.”
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