A recent conference call was held with investors by executives representing the crypto hedge funds. Pantera Capital saidThey believe that DeFi assets like Ethereum will soon be able to break free from their existing correlation with traditional macro markets. Recently, the market has noticed increasing similarities between these spaces. But there’s no guarantee it will continue or even last for very long at all, given how quickly things change in this industry.
Pantera Capital believes the crypto market will be able to “decouple” traditional macro assets even when interest rates go up.
In the interview on February 1, CEO Dan Morehead and co-chief investment officer Joey Krug both said they believe this transition is happening now. In the market, institutional investors are shifting away from stocks and bonds to invest in cryptocurrency like Bitcoin.
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Pantera Capital Management provided details of their latest call to investors public this Wednesday in a Blockchain Letter.
Crypto’s traditional association with macro assets is beginning to disintegrate. According to Krug, history has shown that when the former goes down for 70 days before decoupling and trade on its own again over weeks – as we expect soon enough!– crypto’s becoming more resilient by leaps and bounds.
Krug explained;
It doesn’t guarantee that it won’t go down a lot more next month or whenever, but it just means the odds are high that the markets are at an extreme and will bounce back relatively quickly.
Pantera Capital Predictions are Proven in the Past
Since February 2021, when BTC traded at around USD 47 thousand after correcting 20% in a week, Krug predicted that “a bitcoin rally might be back by April if not sooner.” The price then increased to over $63,000 before starting intense downturns, bringing its sizes below $30,000.
Krug stated that the current prices of many digital assets is not too high. Some DeFi tokens trade at multiples P/E ranging between 10-40. Tech stocks have moderately high turnover rates and have moderate market value.
This time around, he further explained why investors shouldn’t worry about over-investing in cryptocurrency or finance. Even though recent crash caused by multiple governments placing restrictions on transactions using Bitcoin (BTC) in banks,
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P/E (price-to-earnings) ratio is a standard tool used to value stocks and can be found by dividing the market value per share (or token) of an individual company’s portfolio by its annual earnings.
Krug also;
It’s my personal view that USD 2,200 ETH was likely the bottom.
Pantera CEO says you need to consider the cash flow when discounting an asset’s value, which means lower prices if yield rates are higher.
Analysts’ Reviews
Crypto is not just a thing of value; it’s also an investment. Like gold, there are many factors that determine the price and value of crypto. Volatility, or supply vs. need in various markets around the world is an example of such a factor. This can have an impact on the amount of people who want to sell or buy at any time.
According to the Pantera CEO,
It can behave in a very different way from interest-rate-oriented products. I think when all’s said and done, investors will be given a choice. Investors have to make an investment. If rates rise, then blockchain will be most attractive.
With Tensions are risingInflation is predicted to reach an all-time high across Europe and Asia in 2022. It could make bitcoin (BTC), an excellent hedge against volatility. This could also provide stability for other digital currencies like ethereum and Litecoin at their peak next year.
Bitcoin “remains hesitant,” according to an analyst at GlobalBlock. The bitcoin price has been trading lower recently and did not participate in the futures’ recent rally. They are selling off less than normal, however, compared to spot prices that have fallen even more in the last week.
Marcus Sotiriou (an analyst at GlobalBlock) added:
This means that speculation and hedging drove the increase in price rather than genuine demand.