Dan Morehead CEO & Co-Chief Investment Officer of Pantera Capital, a crypto hedge fund, says the Bitcoin price is set to surge during this economic crisis. In fact, Morehead predicts the Bitcoin price could reach a new all-time high within 12 months. That would be a truly astonishing turn of events, but not entirely out of the cards.
The Great Recession and 2008 financial crisis gave rise to Bitcoin in the first place. After watching the financial system critically fail, some computer engineers with talent in the obscure branch of mathematics called cryptography decided enough was enough. So they created an open-source, distributed, peer-to-peer financial system.
The Last All-Time High Bitcoin Price
The Bitcoin price soared in the following decade from virtually worthless to $20,000 per bitcoin in December 2017. It was the most dramatic rise in any asset price in history. For early investors in bitcoin, it was the most high-yielding investment the world has ever seen.
That 2017 all-time high Bitcoin price was a speculative asset bubble, however, and slowly collapsed over the following year. There was an early rush of speculative over-investment in bitcoin, analogous to the NASDAQ bubble that crashed in 2000. The NASDAQ took some time to recover, and Bitcoin has too.
But Pantera’s Morehead thinks this second financial crisis over a decade later will be Bitcoin’s time to shine. He says it was born in the 2008 financial crisis and will come of age in this one. A major thrust of his argument is the massive monetary expansion happening with fiat currency now:
As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. I think they will do that. The corollary is they’ll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies.
The Next Record High in 12 Months?
Morehead says that Bitcoin will appreciate against the Dollar is inevitable:
Now that we’re in the trillions, the deficit just simply has to have a positive impact on the price of things not quantitatively-easable — stocks, real estate, cryptocurrency relative to the price of money. Said another way, the BTC/USD cross-currency rate will rise.
But he takes it a step further and predicts a new all-time high within twelve months. Morehead expects a massive wave of institutional investment to drive the Bitcoin price to this new record high:
The price of bitcoin may set a new record in the next twelve months. It’s not going to happen overnight. My best guess is that it will take institutional investors 2–3 months to triage their current portfolio issues. Another 3–6 months to research new opportunities like distressed debt, special situations, crypto, etc. Then, as they begin making allocations, those markets will really begin to rise.
Institutional investors did see the value in Bitcoin during the crisis over the last few weeks. While Wall Street was tripping circuit breakers during the selloff, Bitcoin was incredibly liquid.
Featured image courtesy of CNBC