As bitcoin, the world’s largest cryptocurrency by market capitalization, continues to rebound from its lows reached last week, one hedge fund manager expects a major price surge right around the corner.
In an interview with CNBC, Pantera Capital founder and Chief Executive Officer Dan Morehead made bullish calls on bitcoin and the cryptocurrency market in general, suggesting that despite a decline that coincided with a larger market sell-off, the digital currency space is back on track to rake in returns for investors. (See also: City of Berkeley Considers ICO to Raise Funds.)
“We’re certainly aware that it’s a very speculative market,” said Morehead. “Its volatile on the upside, but it can be volatile on the downside.”
71-Day Countdown
The cryptocurrency enthusiast noted that bitcoin had a 64% fall from its peak around $20,000 to its recent trough, “and that’s exactly the average decline in the bitcoin market over the last seven bear-market cycles.” Adding that while “the past doesn’t predict the future,” Morehead indicated that the dip seems like the right correction for the digital currency based on historical price fluctuations.
The hedge fund CEO also said that bitcoin has had an average bear market of 71 days, and that the current cycle is in its 52nd day. “So it seems like another couple of weeks and everything will be kind of normal and it could start grinding back up,” he stated.
Further Regulation Welcome
Bitcoin investors, who are used to major price fluctuations, should also gain from the entrance of institutional investors into the market, according to the Pantera founder. “There’s such an institutional appetite to get exposure to this. It’s a half-a-trillion-dollar asset class that nobody owns. That’s a pretty wild circumstance. And it’s also only got a 0.1% correlation to the rest of the financial markets,” said Morehead.
As more institutional investors start trading the “underowned” digital currency, bitcoin should see its market value rise, according to the investor. He also notes that while many view cryptocurrency regulation as a negative headwind, the U.S. has done a “commendable job” and that more regulation should help the market grow at a healthy pace.