Reducing bitcoin prices doesn’t bring good news for crypto followers but if any respite, the crypto market recovered from an even worse position in the past.
Dan Morehead, the CEO of blockchain investment fund Pantera Capital has been involved in blockchain cryptocurrency for a good while and has seen a prolonged crypto downturn in the past. In his opinion, the present downturn, as bad as it seems, has a more optimistic outlook than the last major crypto crash which extended from 2014 to 2015.
While speaking on podcast Unchained hosted by Laura Shin he said he is more confident of cryptocurrency during this bear market than he was in the last period of prolonged price downtrend.
“I think the underlying fundamentals are much much stronger than they were in the 2014-15 crypto winter,” Morehead said, “and it might be a coincidence but it’s funny that Craig Wright pops up at the end of crypto winters.”
Crypto Meets Conditions for Institutional Money
The widely held belief is that the next bull ride in crypto markets will come with the influx of institutional investors in cryptocurrencies. While a bit of this interest has been witnessed since last year, these institutions are deterred by unfamiliar risks associated with crypto markets.
Morehead is optimistic that institutional involvement in crypto markets will happen sooner rather than later. According to him, the crypto market is meeting the conditions to attract institutional money. One of the areas he mentioned is institutional custody of crypto assets which is now becoming available.
As Smartereum reported, Fidelity Investments is planning to launch its crypto asset custody in March. The custody service and other digital asset services, Fidelity said is aimed at institutional investors such as “hedge funds, market intermediaries, and family offices.” Bakkt, Goldman Sachs, and UK Security firm G4S have all hinted at the introduction of similar crypto custody services.
According to Morehead, “Institutional investors really want to have a custodian that’s well-known and regulated. We really haven’t had that in the past.”
He likened institutional investors to retail investors who are always excited and more comfortable investing when the prices begin to go up. He is optimistic that this will lead to an extended market uptrend soon. He recalled:
“There was very little interest in Pantera when prices were around the $65 level but when they topped out at over $1,000, everyone wanted to take up positions.”
Crypto Investment Focus Shifts From ICOs to Scalability Projects
Morehead’s Pantera Capital was established in 2013 and act as a catalyst for widespread blockchain adoption and innovation. The San Francisco-based investment firm is one of the first and leading blockchain investment firms and one of the largest institutional owners of cryptocurrencies.
Morehead explained that though the Fund spread its investment across all areas of the blockchain and cryptocurrency sphere, it tended towards ICOs in the last year in line with the trend at the time. But that is changing. As Smartereum reported, ICOs in the second half of 2018 generated record lows in investments just after ICO returns soared in the 1st and 2nd quarters of that year.
“We [Pantera Capital] invest across the entire spectrum. We invest in pre-auction ICOs and liquid blockchains and venture. That has changed dramatically over the last few years,” Morehead noted. “This year, it is likely that most capital allocation will be venture-focused.”
The new areas of interest now are in blockchain scalability projects, remittance services, and fiat on-ramps, Morehead continued. “There are a dozen different approaches being taken… I am very confident a couple of them will work,” he said. “Over the next couple of years, I think you’re going to see blockchains able to scale at least 100x.”
Bitcoin Sets New Bearish Record
As optimists like Morehead continue to project hope, the present reality—indicated by price charts—appears to be getting worse. Apart from a brief rally during the festive season, there’s been little good price movements in the crypto market. Following the dip that headlined the start of this week (and the end of January), bitcoin price has now fallen for a consecutive six months, the longest such stretch in history. Several crypto analysts have now predicted that the bitcoin market will get a lot worse (as low as $2,800) before it gets better.
Have your take on the bitcoin market in the comment section. Will the next major price movement be a bull ride or a bear trend?
Solomon Sunny is the market reporter for Smartereum, one of the global leaders in Ethereum, blockchain and currency news. He produces technical price updates on digital currencies and writes recent developments about blockchain.