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Resilient Resurgence: Pantera's Morehead Predicts Bitcoin's Imminent Rebound from $26K Lows

Aug 24, 2023 at 12:46 pm

Federal Reserve Chairman Jerome Powell is scheduled to share insights later this week regarding the potential future trajectory of U.S. central bank policies.

In an article, Dan Morehead, the founder of Pantera Capital, a crypto investment firm, highlighted that Bitcoin (BTC) recently concluded its longest period of negative year-over-year returns in its history. However, Morehead contends that this situation won't persist for much longer.

According to Morehead, "Our view is that we've seen enough. There's just so long markets can be down." He pointed out that, as of June 12, Bitcoin's price had experienced negative year-over-year returns for a continuous 15 months since February 8, 2022. Previously, the longest period of negative returns lasted for less than a year, from November 14, 2014, to October 31, 2015.

It's noteworthy that as of Wednesday, Bitcoin has rebounded by over 20% on a year-over-year basis, even after the recent decline from the nearly $30,000 level.

In terms of potential positive triggers for a market in need of a boost, Morehead mentioned the favorable court ruling on the XRP token for Ripple Labs in July, as well as the endorsements from prominent asset managers like BlackRock and Fidelity through their spot Bitcoin ETF applications. Additionally, he highlighted the upcoming April 2024 halving event, where the block reward for mining new BTC blocks will be halved. Morehead disputes the idea that this halving's impact has already been fully priced in, arguing that if the demand for bitcoins remains constant while the supply is reduced, the price will inevitably rise.

Morehead's models suggest that Bitcoin found its bottom late last year and is projected to reach approximately $35,500 by the April 2024 halving and around $150,000 by late 2025.

On Wednesday, Bitcoin reclaimed the $26,000 level as interest rates plunged.

Weak economic data from Europe led to significant drops in surging interest rates, with government bond yields in Germany, the U.K., and the U.S. decreasing by 12 to 20 basis points. U.S. stock indexes saw gains, with the Nasdaq Composite advancing by 1.5% and the S&P 500 ahead by 1%. Bitcoin also experienced a 2% increase to reach $26,400, in line with the gain seen in the Bitsday Market Index (BMI).

Fed Chair Jerome Powell takes center stage

The spotlight of the week is on U.S. Federal Reserve Chairman Jay Powell, who will deliver the keynote speech at the Kansas City Fed's Jackson Hole Symposium on Friday morning. While past Jackson Hole speeches occasionally served as platforms for significant policy announcements, this time expectations are centered around Powell delivering a status quo message. It's anticipated that he will emphasize the Fed's commitment to controlling inflation and its data-dependent approach to future decisions on monetary policy tightening.

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