Pantera Capital Managing Director Dan Morehead is convinced the big cryptocurrency sell-off is slowing down because he thinks “we’ve seen most of this panic.”
In the monthly newsletter released on June 14, the venture capitalist said the best time to buy is when the markets are “well below trend.” A Bitcoin trend gap chart supported this claim because it showed that the asset has only been “cheap” relative to its trend for a fifth of its lifecycle.
For new investors, it is best to buy when the market is well below trend. Now is one of those times.#Bitcoin was only “cheap” compared to its 20.3% trend over the past 11 years.
– Dan Morehead (@dan_pantera) June 16, 2021
He also claimed that year-over-year returns also don’t indicate Bitcoin is overvalued.
“The year-over-year return has never literally gone off the chart like in previous peaks. It is currently trading at 281% year-on-year, which looks very plausible given the money printing. that occurred during this period.
Morehead went on to explain that a convergence of three current events that had caused the markets to fall so sharply.
Another crackdown from China was one of the main factors, but as Morehead pointed out, this has happened several times before.
“OK, let’s take a look at the last thing in China ‘banning bitcoin’ with a broader focus. It’s like we’ve seen ** this ** movie before.
He listed eight separate incidents over as many years where China has banned Bitcoin or suppressed the industry, followed by a chart showing the huge gains Bitcoin has made since. Beijing has also cracked down on Bitcoin mining operations over concerns over energy consumption as it strives to achieve carbon neutrality.
Related: Signs Bitcoin’s hash rate is starting to drift away from China
The second reason cited by the boss of Pantera Capital was Tax Day in the United States, which has traditionally affected the markets as investors chose to liquidate part of their holdings to raise funds for their tax bill.
“Previous Tax Day cycles hit local lows seven days before Tax Day. It makes a lot of sense. That’s about the time it takes to withdraw your money from an exchange and to your bank.
The third factor he named was Elon Musk’s 180 on Bitcoin, but he did not elaborate on the impact of the Tesla CEO’s tweets on the market at the time. Musk sparked a “tweet war” on May 17 when he hinted that Tesla might sell some of its BTC holdings due to environmental concerns over energy use.
Crypto asset markets plunged 43% from their all-time high of $ 2.5 trillion in mid-May, losing more than $ 1 trillion in total market cap in the weeks that followed. Markets have been consolidating since they hit their lowest point in that pullback on May 24, and are currently hovering around $ 1.6 trillion.