Bitcoin’s dog days are over, says one of the biggest cryptocurrency hedge funds.
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Pantera Capital Management, which has more than $800 million in assets, says $6,500 was the low of this bear market and Bitcoin will stay above that price for the majority of the next year, likely surpassing the previous record of almost $20,000, according to a note sent to investors Thursday.
“For those who are new to Pantera who might think a fund manager like Pantera would always be saying ‘Today’s a great day to get long,”’ wrote Pantera’s Dan Morehead and Joey Krug. “I rarely have such strong conviction on timing. A wall of institutional money will drive the markets much higher.”
The fund, which started investing in Bitcoin in 2014, has only made three buy and one sell recommendations in seven years, the note said. The new call comes after Bitcoin crossed its 200-day moving average.
“Traders often use that time period as it seems to be the optimal response time of human psychology,” the report said. “Long enough to stop fretting about missing the trade. Not too long that the information is lost.”
New Hedge Funds Crushed
There were many trends which emerged last year with the increase of the inception of cryptocurrency hedge funds being one of them. Last year saw 167 cryptocurrency hedge funds come into existence with the rise of Bitcoin’s value that really brought the cryptocurrency world into the mainstream.
It is estimated that at the current state of affairs, barely fifty of the cryptocurrency hedge funds will actually be able to raise enough capital funding to remain a sustainable option for the institutional investors who have staked a claim in them.
Most of the rest are not going to to be able to make it. Those that were cautious about entering the space and exercised caution on the other hand could find themselves looking at “once in a lifetime” entry levels. That is assuming the expert opinion that blockchain technology and digital assets become the next big disruptive technology as expected. But with any market or new technology.. time will tell.
Seasoned Managers Patience Could Pay Huge Dividends
While so many of the hedge funds that rushed to open doors in the second half of 2017 were crushed, those that exercised caution while many carelessly entered the space may very well present investors with an incredible buying opportunity.
The general consensus from the experts- at least the ones that called the sharp drop in Bitcoin prices (and took a lot of flack for suggesting the digital currency could drop 50% or better when it was trading near all time highs) are now calling for the next bull run to resume possibly in the 2nd to 3rd quarter this year. Pantera Capital Management says that Bitcoin has found it’s ultimate low at $6,500 in this bear market predicts Bitcoin will rise to and surpass it’s previous $20,000 price high by the end of the year.
BlockWealth Capital Founder Matt Siebenthal received a lot of flack in December when he mentioned Bitcoin could drop below $7500 while it was trading above $19,000 and euphoria for the digital currency was at an all time high. But the former professional trader and hedge fund manger postponed plans to launch a crypto hedge fund in 2017- citing concerns for valuation and suggesting that new funds rushing to open doors in 2017 exercise caution while awaiting regulatory clarity. Siebenthal is said to be planning a soft launch in May-June 2018 with some personal money. Other investors include high-net-worth individuals and family offices.
Michael Novogratz, the former macro manager who’s turned into one of the biggest champions of bitcoin, also shelved plans to start his cryptocurrency hedge fund and was one of the first to publicly predict that the digital money could plunge to $8,000 or lower. Novogratz still believes they’ll be a disruptive force in finance and is calling for Bitcoin above 25,000 by year’s end.
Bulls Back In Town?
Cryptocurrencies could go on a bull run greater than last year and pass the trillion-dollar mark in terms of value, experts told CNBC
Nevertheless, while fickle investors and fund managers are mulling heading for the exit, some bulls are doubling down in preparation for the next rally. Morgan Creek Capital Management, for instance, is reportedly seeking to raise $500 million for what would likely be the industry’s largest cryptocurrency hedge fund.
“There is 200 Trillion dollars tied up in stocks, bonds, gold & cash. I am not excited about putting my money into any of those 4 options right now. If 1% of that 200 Trillion finds it’s way into cryptocurrencies over the next 10 years you’d be looking at a 2 Trillion Valuation. 12X what it is today.”
Despite the sell off, Investors are still eager to invest in the next technological revolution.
“Bitcoin Will One Day Be Worth 40 Times Price It Is Now.”
Cryptocurrency and blockchain technology have become incredibly popular amongst individual and institutional investors across the globe. Many have been leaning more towards investing in hedge funds relating to the cryptocurrency industry instead of the individual cryptocurrencies.
Cryptocurrencies were the best-performing currency in 2015 and by far the best performing asset class of 2017. Business Insider, Forbes & CNBC covered some of the outlandish returns in some of the top cryptocurrency hedge funds last year.
And while the market correction has scared skittish investors from entering, many are using this as an opportunity to buy in low ahead of the next bull run.
As frightening as a 70% correction has been for crypto newcomers, it’s far from the worst corrections the digital currency has sustained. Nearly all of which happened in the first couple months of the year and all were followed by even bigger rallies.
Visualizing the History of Bitcoin Crashes: Are Hodlers Prepared for the Next Bull Run?
The latest Bitcoin crash has some investors believing the “end of days” are near. Once bullish “hodlers” and committed individuals now voice their concerns and fears that this crash indicates that the cryptocurrency market may be faced with a new normal.
While the latest crash has been painful, it is best to step back and assess the current state of Bitcoin relative to its past. Bitcoin has “crashed” many times over the past several years, but how does this latest downturn compare to past steep sell offs?
In order to compare the most recent Bitcoin crash to other past panics, we decided to create a visual that clearly shows twelve other times that the top cryptocurrency has sold off. Each box represents a specific time period in which the price of Bitcoin came under extreme selling pressure.
Using the BitStamp Bitcoin-to-U.S.-Dollar (BTC/USD) pair, our team found the specific highs and lows of the past crashes dating back to January 2012. Utilizing a blue arrow, we highlight the percentage of value lost during each sell off. Lastly, we measured the length of each specific crash period by stating the number of days the correction ultimately lasted.
This Is Not Bitcoin’s First Rodeo, Top Crypto Has History Of Surviving Crashes
Despite the steep 70% losses during the latest cryptocurrency sell off, this is not an unusual event for Bitcoin. Since January 2012, there have been thirteen major corrections or crashes in Bitcoin, including this latest rout. Losses have been as minimal as 30% and as severe as 87% during these Bitcoin panics. Compared to its past events, this latest correction was not even as severe or painful as it has been in the past.
The latest correction took place between December 17, 2017 and February 6, 2018, or 48 days, in which 70% of Bitcoin value was lost. However, if you look at the period between April 10, 2013 and April 12, 2013, Bitcoin lost an astounding 83% of its value over a three-day period. Talk about a panic!
The point is that crashes have become relatively common throughout the cryptocurrency market, which is known for its swift volatility. It is important to turn to data and the facts in times of turmoil, rather than relying on one’s emotions.
Here is a breakdown of the visual, showing each of the corrections in Bitcoin by date of occurrence. It will also include the percent of value loss and the length of the correction in number of days:
1. January 12, 2012 — January 27, 2012, -30%, 16 Days
2. August 17, 2012 — August 19, 2012, -57%, 3 Days
3. March 6, 2013 — March 7, 2013, -33%. 2 Days
4. March 21, 2013 — March 23, 2013, -35%, 3 Days
5. April 10, 2013 — April 12, 2013, -83%, 3 Days
6. November 19, 2013 — November 19, 2013, -50%, 1 Day
7. November 30, 2013 — January 14, 2015, -87%, 411 Days
8. March 10, 2017 — March 25, 2017, -34%, 16 Days
9. May 25, 2017 — May 27, 2017, -33%, 3 Day
10. June 12, 2017 — July 16, 2017, -39%, 35 Days
11. September 2, 2017 — September 15, 2017, -40%, 14 Days
12. November 8, 2017 — November 12, 2017, -30%, 5 Days
13. December 17, 2017 — February 6, 2018, -70%, 48 Days
Overall, the latest correction in the price of Bitcoin is nothing out of the ordinary. History shows that the top cryptocurrency has sustained much more rapid losses during a shorter period of time over the course of the past several years, yet it has not discouraged long-term investors.
Regulatory crackdown fears seem to be main source of the latest crash, but the recent cryptocurrency regulatory hearing before the U.S. Senate struck a much brighter tone than crypto traders had anticipated.
This shows that fears of regulators attempting to shut down the cryptocurrency market are overblown. In the end, cryptocurrency is still a very relatively new concept that will have its highs and lows, but its resilience in the face of uncertainty has been nothing short of incredible.
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