Pantera Capital with Perspective on Crypto Crash Despite ‘Further Support Testing’ Ahead

Yesterday’s crash in the cryptocurrency market may have rocked short-term investors, but for Pantera Capital’s Dan Morehead, it was another opportunity for some perspective. The cryptocurrency markets have shaved $600 billion from their combined value this year, as Bloomberg pointed out, and where we go from here is unclear. The technical signals suggest that more selling could be ahead, while long-term investors like Morehead choose to focus on the positive developments.

Pantera Capital, which boasts more than $700 million in assets under management, dubs itself as the maiden U.S. investment firm to launch a bitcoin investment fund and has been investing in cryptocurrencies for half a decade. The crypto fund has exposure to many high-profile projects, including the likes of Augur, 0x, OmiseGO and more.

Morehead described yesterday’s selling action in response to the delayed decision by the SEC on a bitcoin ETF as an “overreaction” when actually nothing’s changed. “An SEC rejection is the same story we’ve had for five years,” Morehead told CNBC.

As for that perspective, the bitcoin price remains 82% higher than it was a year ago despite shedding more than two-thirds of its value since the December 2017 peak. Morehead previously tilted his hand to Pantera’s bitcoin trading strategy, advising investors to buy when the BTC price dips below the 230-day moving average, hold for one year and then liquidate, which he said historically generates a profit of more than 200%.

But if you ask Fundstrat market technician Robert Sluymer, the technical signals paint a persistently bearish picture. After yesterday’s sell-off, the bitcoin price was trading below its 50-day moving average and at $6,385 it’s not too far from its June low below $6,000.


Source: Bloomberg and Bitstamp

Sluymer said in a client letter cited by Bloomberg: “Expect further testing of next support level, starting at $6072 followed by 5775.”

Bitcoin ETF Remains Elusive

Meanwhile, the bitcoin price has refused to trade on the positive industry developments, most notably the Wall Street-backed cryptocurrency trading platform dubbed Bakkt that was announced several days ago. Instead, traders are focused on the likelihood of a U.S. bitcoin ETF, which appears to be shortsighted.

Morehead points out that the last ETF category to earn a certification in 2012 was copper, which has been around for thousands of years. Bitcoin, on the other hand, is “early-stage venture” with a “real-time price,” which Morehead points out makes it unique but not any more special to receive early ETF approval. But next year at this time, Morehead is betting that the bitcoin price “will be much, much higher than it is today.”

Featured image courtesy of Shutterstock.

Gerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.