Despite the recent turbulence in the cryptocurrency market, Pantera Capital envisioned a surge in bitcoin’s price in the following weeks. According to the investment firm, ‘Tax Day’ could be one of the propellers. Moreover, the cryptocurrency industry might soon separate from traditional financial markets and start trading independently, the company added.
light in the tunnel
Bitcoin’s last few months have been quite bearish. While many supporters expected it to trade at $100,000 by the end of 2021, it ended the year below $50,000, and the start of the new year meant more declines.
February 24th was another negative trading day as the military conflict between Russia and Ukraine led to significant price slumps for the asset. Today, though, BTC has recovered most losses and stands just shy of $39,000.
In its report, dubbed “The Next Mega-Trade,” Pantera Capital explained the reasons why bitcoin may soon resume its bull run. One of them is the “Tax Day” which is approaching this year on April 18th.
The company reminded that in 2013, 2017, 2020, and 2021 (previous big run-ups), bitcoin’s price soared significantly 35 days prior to the event. However, each time the asset lost some ground around that day as investors were selling some holdings to cover taxes.
” It makes sense. Many crypto traders are new to investing. You can imagine a person buying as many bitcoins as possible. Since they are “all-in” on crypto, the only way to raise funds to pay their tax bill is to sell crypto. Prices fall before tax day.
Crypto Could Gain Independence From Financial Markets
Pantera Capital also touched upon Fed’s policies during the COVID-19 pandemic. The company called the mass printing of fiat currencies, the manipulation of Treasuries, and mortgage of bonds a “clearly wrong” mix.
He further blamed the US central bank for rising inflation and economic turmoil within US borders. Pantera Capital said a bubble will burst, after which the Fed will have to raise interest rates even further. According to CEO Dan Morehead, this seems like good news for the digital asset universe:
“I have a very strong conviction that the markets are really getting this wrong and that the rise in interest rates (which I think was pretty obvious that it was going to happen and will keep happening) is not really that bad for crypto. And relative to the other asset classes, is actually really great for blockchain prices.”
Going forward, Pantera Capital believes the cryptocurrency industry will emerge as a financial niche in its own right, meaning fluctuations in traditional money markets will no longer be a concern:
“And so we think over the next number of weeks, crypto is basically going to decouple from traditional markets and begin to trade on its own again.”
