Bitcoin (BTC) is beginning its “seventh bull cycle,” and investors should not be afraid of cryptocurrencies after FTX, Pantera Capital believes.
In his latest “Blockchain Letter” on Feb. 8, asset management firm CEO Dan Morehead predicted that 2023 would be a “year to rebuild trust.”
Morehead: Crypto Assets Have ‘Seen The Lows’ Of 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 across all crypto assets.
While the timing for such a scenario varies, consensus remains absent when it comes to how the market will recover.
For Morehead, however, the time to turn bullish on the cryptocurrency sector has now arrived.
“Pantera has been through ten years of Bitcoin cycles and I have traded through 35 years of similar cycles”he pointed.
“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 equities. As Cointelegraph continues to report, this forms the backbone of some other forecasts for 2023.
Morehead argued that Bitcoin’s retracement from recent all-time highs had put the market well 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 has completely erased the previous bull market. In this case, giving back 136% of the previous rally.”he wrote next to the data that accompanied it.
“The average decline has been 307 days and the previous bear market was 376. The average decline has been -73% 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 headed into the decentralized finance space, with Pantera nonetheless positioning itself for a year of “rebuilding trust” in centralized finance (CeFi) first and foremost.
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 booms and busts, especially when it came 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 the crypto industry 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 ongoing regulatory battle involving the US Securities and Exchange Commission, it envisioned that CeFi would claim influence around the world “on a jurisdiction-by-jurisdiction level.”
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