Bitcoin (BTC) this summer completed its longest-ever period of negative year-over-year returns, wrote Dan Morehead, founder of crypto investment firm Pantera Capital.
It won’t last, he argued.
“Our view is that we’ve seen enough,” Morehead wrote. “There’s just so long markets can be down.”
As of June 12, Morehead said, the price of bitcoin had been negative on a year-over-year basis for 15 consecutive months (starting Feb. 8, 2022). Prior to this, the longest period had been less than a year (Nov. 14, 2014, to Oct. 31, 2015), he continued.
It’s notable that bitcoin is, as of Wednesday, up more than 20% year-over-year, even after last week’s tumble from the near-$30,000 level.
As for possible positive catalysts for a market surely in need of one, Morehead notes that July’s positive court ruling on the XRP token for Ripple Labs still stands, as do “endorsements” from BlackRock, Fidelity and other asset managers in the form of their spot bitcoin ETF applications.
And don’t forget about the upcoming April 2024 halving at which the BTC block reward for mining fresh blocks will be cut in half. Morehead isn’t buying the efficient market hypothesis that the halving is so widely known that the its effect has already been reflected in pricing.
“If the demand for bitcoins stays constant and the supply of new bitcoins is cut in half, this will force the price up,” said Morehead. His models suggest bitcoin bottomed for good late last year, should hit around $35,500 by the April 2024 halving and nearly $150,000 by late 2025.
Weak economic data out of Europe early Wednesday sent previously surging interest rates sharply lower, with 10-year government bond yields in Germany, the U.K. and the U.S. all lower by 12 to 20 basis points.
U.S. stock indexes are higher, led by the Nasdaq Composite’s 1.5% advance. The S&P 500 is ahead by 1%.
Bitcoin is up 2% to $26,400, roughly inline with the gain for the CoinDesk Market Index (CMI).
The week’s main economic event takes place on Friday morning, where U.S. Federal Reserve Chairman Jay Powell will deliver the keynote speech at the Kansas City Fed’s Jackson Hole Symposium.
While the Jackson Hole speech in the past has occasionally been a forum for important policy announcements, the betting this time around is that Powell delivers a status quo message – that the Fed remains focused on containing inflation and will be data dependent going forward on decisions about whether to further tighten monetary policy.
Edited by Nick Baker.
