Three primary reasons why the cryptocurrency market dumped US$1 trillion dollars in market cap. value.
The chief executive of Pantera Capital, Dan Morehead, is confident that the massive cryptocurrencies selloff is slowing because he thinks “we’ve seen the most of this panic”.
In the monthly newsletter published on June 14, the venture capitalist stated that the best time to buy is when markets are “well below trend”. A Bitcoin trend deviation chart backed up this claim as it showed that the asset has only been this “cheap” relative to its trend for a fifth of its lifecycle.
Dan Morehead, CEO of Pantera Capital, believes that the big cryptocurrency sell-off is slowing down because he thinks that “we have seen most of the panic.
” In a monthly newsletter released on June 14, Morehead stated that the best time to buy is when the market is “well below trend.” The Bitcoin trend deviation chart supports this claim because it shows that the asset is only so “cheap” relative to the trend of one-fifth of its life cycle.
For new investors, it is best to buy when the market is far below the trend. Now is one of such periods. When compared to the 20.3% trend of the past 11 years, Bitcoin is just so “cheap”. He also claimed that the year-on-year return does not indicate that Bitcoin is overvalued.
The year-over-year performance has never fallen off the chart like in past peak periods. Its current transaction price is 281%, which seems completely reasonable considering the printing of money at that time.
Morehead went on to explain that the confluence of three news events caused a drastic fall in the market.
China’s repression is one of the important factors, but as Morehead pointed out, this has happened many times before.Excluding China’s ban on bitcoin, “it looks like we’ve seen this script play out before”.
He cited eight independent incidents in which China has banned Bitcoin or cracked down on the industry over the years, closely followed by a chart showing the huge benefits that Bitcoin has made afterwards.
Beijing has also been involved in cracking down of the Bitcoin mining business because of its concerns about energy consumption in its fight for carbon neutrality.
The second reason cited by the head of Pantera Capital is that the US Tax Day raises funds for their tax bill. “The previous Tax Day cycle reached a local low 7 days before the tax day. This makes a lot of sense because it is about the time it takes to withdraw your money from the exchange and deposit it in the bank.”
He mentioned the third factor as Elon Musk’s Bitcoin 180, but he did not elaborate on the impact of Tesla’s CEO’s tweets on the market at that period. . On May 17, Musk hinted that Tesla might sell some of its BTC assets out of environmental concerns about power consumption, which triggered a “Twitter war”.
The crypto asset market has fallen by 43% from its all-time high of US$2.5 trillion set in mid-May, and the total market value sheds over US$1 trillion in the few weeks that followed. Since the call-back hit its lowest point on May 24, the market has been consolidating and is currently hovering at around US$1.6 trillion.