• Bitcoin has only been this ‘cheap’ relative to its trend 20.3% of the past 11 years, according to Pantera Capital CEO Dan Morehead
  • “Bitcoin’s still well below its ten-year compound annual growth trend. It’s not like we’re in overpriced territory or it’s a bubble,” he said.

Based on the idea that human nature is pro-cyclical, market participants should “go against the urge” to sell and instead buy bitcoin while the market is below trend, said Dan Morehead, Pantera Capital CEO and co-chief investment officer. 

Pantera Capital’s Bitcoin Fund has returned over 79,400% in seven years and has returned billions of dollars to its investors. Pantera currently manages over $4.8 billion in capital.

“Resist the urge to close down positions. If you have the emotional and financial resources, go the other way,” he said in his June investor letter

The reason why? Well, “bitcoin has only been this ‘cheap’ relative to its trend 20.3% of the past 11 years,” Morehead said in a tweet. 

Although a recent peak went over trend value for 2021, in general, bitcoin is “far under trend valuation” and currently is trading 35% below its 11-year exponential trend, he said. 

And in times like these, it’s best for new investors to buy when the market is below trend, according to Morehead. 

Trends are just starting, Morehead said 

In the latest letter to investors, he said a convergence of elements has caused the blockchain markets to drop sharply but “the volatility has presented a very compelling opportunity.” 

Elements like China’s ban on cryptocurrency (for a third time), Tax Day and Elon Musk’s tweets have factored into the recent market drops, he said. 

“When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” Musk said in a tweet on June 13. 

Tax Day can have a significant impact on crypto prices as some people buy as much bitcoin they can, only to find out they owe some of their gains in taxes so prices fall leading up to Tax Day as some people pay their tax bills with crypto, Morehead said. 

“Bitcoin’s still well below its ten-year compound annual growth trend. It’s not like we’re in overpriced territory or it’s a bubble. All these major firms and the Wall Street wealth platforms have now allowed their clients to buy Bitcoin. Big corporations, many of whom are not called Tesla Motors or Elon Musk, are buying Bitcoin. Those trends are just starting and this is a multi-decade disruption. I think we have a long way to go here,” Morehead said in an interview with Bloomberg News.  

  • Jacquelyn Melinek is a Houston-based reporter covering digital asset funds and markets. She previously reported on energy markets for S&P Global Platts and Bloomberg News and is published in over 65 news outlets. She graduated from the University of North Carolina at Chapel Hill with a degree in Media and Journalism.