Next Bitcoin Price Crash Will Be 'Below' 80%, Pantera Capital CEO Says

Bitcoin ( BTC ) the market’s tendency to collapse by more than 80% after recording strong rises could end. It is according to a news rep...

Bitcoin (BTC) the market’s tendency to collapse by more than 80% after recording strong rises could end.

It is according to a news report published by California hedge fund Pantera Capital. In detail, the report notes that recent periods of falling BTC prices have been less severe than in the past.

For example, in 2013-15 and 2017-18, Bitcoin crashed up to 83% after hitting nearly $ 1,111 and $ 20,089, respectively. Likewise, the cryptocurrency bull run in 2019-2020 and 2020-2021 has resulted in massive price corrections. However, the scales of their retracements thereafter were -61% and -54% respectively.

Bitcoin Bullish and Bear Markets Throughout History. Source: Pantera Capital

Dan Morehead, managing director of Pantera Capital, pointed to the steady decline in sell sentiment after the 2013-15 and 2017-18 bear cycles, noting that future bear markets would be “shallower.” He explained:

“I have long advocated that as the market becomes larger, more valuable and more institutional, the magnitude of price fluctuations should moderate.”

The statements emerged as Bitcoin renewed its bullish strength to retest its current high of nearly $ 65,000.

BTC / USD has exceeded $ 60,000 for the first time since early May, when the United States Securities and Exchange Commission approved the first Bitcoin exchange-traded fund (ETF) after years of rejection of similar investment products.

Approval of ProShare Bitcoin Strategy ETF raised expectations that this would make it easier for institutional investors to gain exposure to the BTC market. It also helped Bitcoin to wipe out nearly all of the losses suffered during the April-July down cycle, as the price of BTC doubled to recover to levels above $ 60,000.

Bitcoin price cycles throughout history. Source: Pantera Capital

BTC undervalued?

It is increasingly common to hear valuations of $ 100,000 as Bitcoin grows to be a traditional financial asset after its first ETF approval.

Related: BTC price of $ 200,000 is ‘programmed’ as Bitcoin heads to 2nd RSI peak

Morehead cited the popular stock-flow model—Which studies the impact of Bitcoin’s “reduce by half“price events – to rule out a similar bullish outlook for the cryptocurrency. He noted that the first halving reduced Bitcoin’s new issuance rate by 15% of the total circulating supply (around 10 , 5 million BTC), leading to a price of 9.212% BTC rally.

Reduction of Bitcoin supply after each halving. Source: Pantera Capital

Likewise, the second halving reduced the supply of new Bitcoins by a third of the total Bitcoin in circulation (~ 15.75 million BTC). This led to a 2.910% bull run, almost a third of the previous one, showing a little less impact on the price of Bitcoin.

Post-Bitcoin rallies cut in half. Source: Pantera Capital

The last recorded halving took place on May 11, 2020, which further reduced the amount of new BTC compared to the supply in circulation with Bitcoin’s rally by over 720% since.

“The flip side is that we probably won’t see the 100 rallies in a year either,” Morehead said, adding:

The cycles shown logarithmically give me the impression that today’s level is cheap.

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