Pantera Capital CEO Dan Morehead believes that Bitcoin has entered a new era of smooth-sailing, less exaggerated bull and bear cycles.
Writing in the digital asset manager’s latest monthly letter, Morehead, an early crypto investor, says that Bitcoin has officially left behind the traditional 4-year halving-cycle, and is now on to the next price era.
To back up this idea he outlines how each halving has had a smaller and smaller impact on the price of Bitcoin as we move through time. As the chart below depicts, each subsequent halving’s impact on price will “likely taper off in importance as the ratio of reduction in the supply of new bitcoins from previous halvings to the next decreases.”
Morehead says that his sense is that the “post-halving rally” ended in April, and that Bitcoin has just made it through a period of bearish “insanity” driven by Chinese mining bans and ESG (environmental, social, and governance) concerns. With the recent rally to back past the $60,000, Morehead says BTC is now in a new bull market.
Based on Bitcoin’s evolving trend of lessening volatility, the Pantera Capital chief says that the leading cryptocurrency will no longer have parabolic rallies, or devastating declines.
“I long advocated that as the market becomes broader, more valuable, and more institutional the amplitude of prices swings will moderate. While we’ve had two down 83% bear markets already, I believe those are a thing of our primordial past. Future bear markets will be shallower. The previous two have been -61% and -54%.
Unfortunately, there’s no free lunch. The flipside is we probably won’t see any more of the 100x-in-a-year rallies either.”
Looking at Bitcoin’s major price cycles logarithmically, Morehead concludes that at current levels, BTC “looks cheap” to him.
In July, Morehead told Yahoo Finance that Bitcoin’s fair price was likely somewhere around $700,000, based on the current adoption trajectory and the possibility of most of the world joining the network via smartphones in the next decade or so.
“We did a study showing the number of people using bitcoin over the years and price of bitcoin. Both of those data series went up by an order of magnitude every two years. If that kept going, that would put bitcoin at $700,000 when everybody with a smartphone uses it. Ten years time is a reasonable forecast.”