Bitcoin (BTC) is beginning its “seventh bull cycle,” and investors should not be scared of crypto post-FTX, Pantera Capital believes.
In its latest “Blockchain Letter” on Feb. 8, the asset management firm’s CEO, Dan Morehead, predicted that 2023 would be a “year for rebuilding trust.”
Morehead: Crypto assets have “seen the lows” this cycle
With BTC price action retracing slightly after gaining 40% in January, some market participants still insist that new macro lows are due across crypto assets.
While the timing for such a scenario varies, consensus remains absent when it comes to how the market will rebound.
For Morehead, however, the time to flip bullish on crypto is already here.
“Pantera has been through ten years of Bitcoin cycles and I’ve traded through 35 years of similar cycles,” he noted.
“I believe that blockchain assets have seen the lows and that we’re in the next bull market cycle – regardless of what happens in the interest-rate-sensitive asset classes.”
That perspective differs from the majority in casting aside the debate over crypto price correlation with risk assets such as equities. As Cointelegraph continues to report, this forms the backbone of some other prognoses for 2023.
Morehead argued that the drawdown from Bitcoin’s latest all-time highs had placed the market well within the historical context, despite dipping below its previous bull market all-time high after the FTX debacle in November 2022.
“The decline from November 2021 to November 2022 was the median of the typical cycle. This is the only bear market to more than completely wipe out the previous bull market. In this case, giving back 136% of the previous rally,” he wrote, alongside accompanying data.
“The median downdraft has been 307 days and the previous bear market was 376. The median drawdown has been a -73% downdraft and the latest bear market ended at -77%.”
Going forward, a trend change will ensue, with Bitcoin on its way to fresh record highs.
“I think we’re done with that and beginning to grind higher,” Morehead added.
A “jurisdiction-by-jurisdiction” recovery
Similar optimism was directed at the decentralized finance space, with Pantera nonetheless positioning for a year of “rebuilding trust” in centralized finance (CeFi) first and foremost.
Related: Bitcoin price taps 3-week lows as SEC fears liquidate $250M of crypto longs
This would be necessary, Morehead claimed, in light of last year’s multiple corporate failures, which precipitated the crypto bear market.
“2022 was a year of booms and major busts, especially as it pertains to CeFi. In the span of a few months, the world saw Three Arrows Capital collapse, Do Kwon’s LUNA disintegrate, Voyager Digital go bankrupt, and Sam Bankman-Fried’s (SBF) FTX empire shatter,” he explained.
“What did all these events have in common? The headlines like to suggest that it was crypto or Web3 that failed. But, in fact, it was a combination of bad actors skirting lines in jurisdictions without clear regulations. If 2022 was the year of breaking rules and failing, I believe 2023 is the year that entities instead 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, it foresaw CeFi reclaiming its clout worldwide “on a jurisdiction-by-jurisdiction level.”
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