Now’s the time for new investors to buy crypto, says Pantera’s Dan Morehead
"The market has been this ‘cheap’ or cheaper relative to trend only 20.3% of the past eleven years,” says Morehead.
Thu, 17 Jun 2021, 08:43 am UTC
Last month is probably one of the most volatile months for the crypto market as the correction pulled Bitcoin (BTC) to just above $31,000 from April’s all-time high above $64,000. But Pantera Capital CEO Dan Morehead believes that the massive selloff is over and that investors have the opportunity to accumulate more coins at current price levels.
“A convergence of things caused the blockchain markets to go down sharply,” Pantera Capital wrote in its monthly newsletter published on June 14, which named China’s “ban” on bitcoin, Tax Day, and Elon Musk’s 180 as some of the factors for the massive correction. “The volatility has presented a very compelling opportunity.”
Pantera also explained that BTC’s current price is not overvalued and is actually a deviation from an 11-year trend. “Bitcoin is currently trading 36% below its 11-year exponential trend,” Pantera added, referring to a chart to back up its claim. “Bitcoin has only spent 20.3% of its history as far under trend valuation. At the recent peak, it went just a touch over trend value. As you can see, past peaks were many multiples of trend value.”
Dan Morehead also pointed out that BTC’s year-on-year figures suggest that the crypto is not overvalued as well. “The year-on-year return never went literally off-the-chart like in past peaks,” he explained. “It’s currently trading at 281% year-on-year — which seems entirely plausible given the money printing that has occurred in that period.”
“Bitcoin’s four-year-on-year return is at the lower end of its historical return,” Morehead added. “Again, doesn’t look overvalued. Joey Krug and I think we’ve seen the most of this panic.”
He also reminded holders that Bitcoin generally goes way up. “It has averaged more than tripling annually for ten years,” he said. “Anyone that has held bitcoin for 3.25 years has made money. Bitcoin has only printed one calendar year with a lower low. So, most of those investors are up big-time.”
“Resist the urge to close down positions,” Morehead advised. “If you have the emotional and financial resources, go the other way.”
The investor believes that now’s the perfect time for new investors to enter the market. “For new investors, it’s best to buy when the market is below trend,” Morehead said. “Now is one of those times. The market has been this ‘cheap’ or cheaper relative to trend only 20.3% of the past eleven years.”
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