Bitcoin (BTC) is beginning its “seventh bull cycle,” and investors should not be afraid of post-FTX cryptocurrencies, Pantera Capital believes.
In his last “Blockchain LetterOn February 8, the CEO of the asset management firm, Dan Morehead, predicted that 2023 would be a “year to rebuild trust.”
Morehead: Crypto Assets Have “Seen Lows” This Cycle
With BTC price action pulling back slightly after gaining 40% in January, some market participants are still adamant that new macro lows are expected in crypto assets.
While the timing for such a scenario varies, consensus remains absent as to how the market will recover.
For Morehead, however, the time to turn bullish on cryptocurrencies is here.
“Pantera has been through ten years of Bitcoin cycles and I have traded through 35 years of similar cycles,” he noted.
“I think that blockchain assets have hit lows and that we are in the next bull market cycle, regardless of what happens in the interest rate sensitive asset classes.”
That perspective differs from most by sidestepping the debate over the correlation of cryptocurrency prices with risky assets like stocks. As Cointelegraph continues to report, this it forms the backbone of some other forecasts for 2023.
Morehead argued that the fall from Bitcoin’s recent all-time highs had placed the market within historical context, despite falling below its previous all-time bull market high after the FTX debacle in November 2022.
“The decline from November 2021 to November 2022 was the typical cycle median. This is the only bear market that completely eliminates the previous bull market. In this case, giving back 136% of the previous rally,” he wrote, along with the accompanying data.
“The median downdraft has been 307 days and the previous bear market was 376. The median downdraft has been a -73% downdraft and the last bear market ended at -77%.”
Going forward, a trend reversal will take place, with Bitcoin on its way to new all-time highs.
“I think we’re done with that and started working higher,” Morehead added.
A “jurisdiction by jurisdiction” recovery
Similar optimism was directed at the decentralized finance space, with Pantera, however, positioning itself for a year of “rebuilding trust” in centralized finance (CeFi) first.
Related: Bitcoin Price Hits 3-Week Lows as SEC Fears of Liquidating $250 Million in Crypto
This would be necessary, Morehead asserted, in light of the multiple corporate failures of the past year, which precipitated the cryptocurrency bear market.
“2022 was a year of major booms and busts, especially when it comes to CeFi. In the span of just a few months, the world saw the collapse of Three Arrows Capital, the disintegration of Do Kwon’s LUNA, the bankruptcy of Voyager Digital, and the destruction of Sam Bankman-Fried’s (SBF) FTX empire,” he explained.
“What did all these events have in common? Headlines like to suggest that it was crypto or Web3 that failed. But in fact, it was a combination of bad actors skirting the lines in jurisdictions without clear regulations. If 2022 was the year of breaking the rules and failing, I believe 2023 is the year entities follow the rules and enjoy the rewards of doing so.”
While the letter did not mention the current regulatory battle involving the United States Securities and Exchange Commission, he foresaw that CeFi would claim its influence around the world “on a jurisdiction-by-jurisdiction level.”
The views, thoughts, and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
