Recent developments in the cryptocurrency industry have taken a huge toll on cryptocurrency valuations. Price forecasts have never looked so bleak. However, Pantera Capital is bullish in its outlook for the cryptocurrency market, particularly with its Bitcoin price forecast.
Pantera Capital is the world’s largest cryptocurrency hedge fund by AUM, headquartered in Menlopark, California.
Pantera Capital Bitcoin Price Prediction
Pantera’s technical price forecast takes into account Bitcoin’s money supply function. Satoshi Nakamoto created Bitcoin to have a total supply of 21 million with the supply of new coins over time. This fact provides a key aspect in predicting the price of Bitcoin.
Assuming the demand for new bitcoins remains constant and the supply of new bitcoins is halved, Bitcoin prices will rise. Currently, every 10 minutes 6.25 BTC is minted and rewarded to miners (Block reward).
The block reward is halved every 4 years, technically this will be possible until 2140 marking when all Bitcoin will be mined. The next halving is predicted to take place on April 20, 2024, when the block reward will drop to 3,125 BTC per block.
The 2016 halving event reduced the supply of new BTC by a third as much as the first. Interestingly, it had a full third effect on price. Then in 2020, the halving event reduced the supply of new BTC by 43% compared to the previous halving. 23% had a big impact on the price.
As the price is expected to increase, the demand for bitcoin has also increased before the halving event.
Historically, Bitcoin bottomed 477 days before the halving event and then took the uptrend leading up to it. After the halving, prices rose to the top of a 480-day bull cycle. If history rewrites itself, BTC will bottom on December 30, 2022, rally in early 2024, and then rally stronger after the halving event. BTC will trade at $36,000 before the halving event and then rise to $149,000.
Future cryptocurrency market dynamics
The company expects price volatility in the cryptocurrency ecosystem as fears of contagion force asset owners to adjust their portfolios. Solana, Aptos and other assets linked to FTX will be the hardest hit.
FTX exploded. The stock exchange, once the third-largest by trading volume, has filed for bankruptcy protection in the United States. The two-week fiasco will surely be an inflection point for the crypto industry.
The markets are down a lot on this news and that will be reflected in our performance, but we are also waiting for the markets to come back.
Pantera Capital disclosed that its exposure to FTX was limited to the acquisition of Blockfolio revenues. The returns were expressed in FTX shares and FTT. Quick Risk Response liquidated their positions on November 8. Their exposure was about 3% AUM.
The main thing we aim to avoid in situations like this is losing assets in a way where the assets are gone permanently.
The episode, according to the firm, will be a setback for adoption as some fearful and skeptical retail investors fear being left out. They look to previously space-wary institutions to deepen their skepticism. However, over time, the negative mood will decrease.
In terms of regulation, new tough measures will be warranted, especially for platforms that deal with retail customers. The company praised decentralized protocols because they are public, open and more transparent, and likewise do not require trust from users. They hoped that regulators would see this and shift their focus away from regulating DeFi to regulating centralized entities.
But their reasoning may not go down well with European regulators. At an event at Warwick business schools, Bank of England Deputy Governor Jon Cullife noted that decentralized protocols are driven by “stakeholders who derive a return from their transactions”. He compared decentralized protocols to a driverless car, “DeFi is only as good as the rules, programs and sensors that make up their operations.” The authorities in the UK will need a great deal of assurance to implement such systems in the mainstream financial sector.