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Crypto Bottom is In and ‘Massive Rally’ Awaits, Pantera Capital Predicts

Fredrik Vold
Last updated: | 4 min read
Source: Adobe/amianobuffo

 

After a 50% decline from the top, the bear market in bitcoin (BTC) and crypto more broadly is probably over for now, and a new “massive rally” is likely to happen within the next year, crypto hedge fund Pantera Capital’s CEO Dan Morehead has said.

Morehead wrote in his latest newsletter that: 

“I think we’re done with the bear market -50% and we’re on to a new rally cycle. The next 6-12 months are likely to see a massive rally as investors flee stock, bond, and real estate markets – for blockchain.”

The well-known crypto asset manager added that the bitcoin price is now 56% below an 11-year-old exponential growth trend on the bitcoin chart. “The markets have rarely been so cheap relative to the trend,” he said.

Source: Pantera Capital

Rising rates ‘for years’ ahead

Morehead also said in his newsletter that we are entering a period of rising rates, and that this is something that will probably continue “for years,” with the 10-year US treasury rate predicted by the firm to triple.

The investor noted that the median forecast for the peak in the US Federal Reserve’s Federal Funds Rate is 2.1%.

“That’s below where they were just before the pandemic, even though the economy is massively overheated compared with two years ago,” Morehead said, while reminding readers that “no working-age person in America has invested in a rising rate environment.”

‘Decoupling’ already occurring

This latest prediction from Pantera that the crypto market bottom is behind us comes after the firm in early February delivered an outlook that turned out to be spot on.

On February 1, the firm’s co-chief investment officer Joey Krug predicted in a call with investors that the correlation between bitcoin and traditional financial markets would break this spring.

“And so we think over the next number of weeks, crypto is basically going to decouple from traditional markets and begin to trade on its own again,” Krug said at the time, adding that he expected a move higher for crypto “relatively quickly.”

So far, that prediction has turned out correct, with the BTC price up more than 20% since the comments were made on February 1. The broad-based S&P 500 stock index, meanwhile, is up by a mere 1% over the same time period.

USD 46k key for further upside

Notably, Pantera is not the only firm that sees an upside from the current price levels in the crypto market.

According to crypto hedge fund BitBull Capital CEO Joe DiPasquale, the current consolidation pattern for bitcoin above the USD 46,000 level is “key” for bullish continuation towards the USD 50,000, a major milestone for the bitcoin price.

“While we did see rejection around USD 48,000, as long as BTC remains above USD 46,000 bulls can be hopeful of another move. If we lose these levels in the new week, another test of the low USD 40Ks is the probable scenario,” DiPasquale said in emailed comments on Tuesday.

All-time high in Canadian bitcoin ETF inflows

Another data point to may provide clues as to how investors are positioning themselves for a possible crypto market rally is the level of inflows to bitcoin-backed exchange-traded funds (ETFs).

According to crypto analytics provider Glassnode, inflows into Canadian bitcoin ETFs hit its highest level ever, with BTC 6,594 added to the ETFs since January this year.

Bitcoin ETFs in Canada are often paid attention to because the country – unlike the US – has approved several ETFs backed by actual bitcoin rather than bitcoin futures contracts.

Among the many funds listed in Canada, the Purpose Bitcoin ETF saw the biggest increase in holdings during the period with a net growth of 18.7% to reach BTC 35,000. The increase came despite “a storm of macro and geopolitical headwinds,” Glassnode said in a report on Monday.

At press time (11:33 UTC) on Tuesday, BTC stood at USD 46,672. The coin is up 1.1% for the past 24 hours and down 0.7% for the past 7 days.

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