Dan Morehead Weighs In on Bitcoin’s Seventh Bear Market

Bear markets are nothing new for bitcoin, with the latest devaluation marking the seventh such occurrence since 2009. According to Pantera Capital’s Dan Morehead, now is the ideal time to increase your position. He also had a few choice words for the traditional banking industry.

Bitcoin: Time To Buy

In a recent interview, Morehead described blockchain investments as the most “asymmetric risk-reward trade” he has ever seen. In other words, if you invest in blockchain, there’s no way you can lose everything. What’s more, many of the funds currently invested in bitcoin can increase their value 25 times.

With bitcoin hovering around $6,300, now is “actually a good time to increase your position,” Morehead said, as quoted by CCN.

“It’s highly likely to be the low point for the industry,” he said, reminding investors that the bitcoin price has been steadily increasing since 2009. “My normal view is that it’s going to return to its trend.”

Since inception, bitcoin has had only one down year (2015). In all other years, the cryptocurrency has returned at least 145%.

Morehead also responded to Warren Buffett’s claim that bitcoin is “rat poison squared.”

“It is rat poison; it’s just the banks and credit card companies are the rats.”

As Hacked recently reported, Pantera Capital has engineered returns of more than 10,000% since its inception.

Institutional Money

Despite the recent downturn, 2018 is shaping up to be the year of the crypto hedge fund. A total of 96 cryptocurrency funds have come into existence this year, according to Crypto Fund Research. This figure is expected to reach 165 in 2018 compared with 156 all of last year.

There are now 466 cryptocurrency funds around the world, with more than half coming into existence since the start of 2017. Crypto hedge funds account for more than half of the total.

The crypto market is expected to receive a huge boost from institutional capital once regulators change existing rules allowing for bitcoin exchange-traded funds (ETFs) to be listed. The launch of Bakkt – a startup company backed by Intercontinental Exchange, Microsoft and Starbucks – is also expected to streamline mainstream adoption of cryptocurrency both at the investor and consumer levels.

Leading digital currency exchanges such as Coinbase are expanding custody services to appeal to Wall Street. Crypto custody is one of the biggest developments currently underway in the industry.

However, institutional involvement in crypto may be a double-edged sword. Multiple researchers, including the San Francisco Federal Reserve, believe institutional meddling is responsible for the 2018 bear market. They cite the launch of bitcoin futures in December as the main catalyst for the now eight-month selloff.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi