Pantera Capital: Bitcoin Has Entered Its Seventh Bull Cycle
Bitcoin has entered its seventh bullish cycle from a historical context, according to a new report published by Pantera Capital. This opinion may come as consolation to investors, as the decade-old firm is one of the earliest and largest institutional investors in the cryptocurrency and blockchain industry, having made investments in companies such as Bitstamp, Bitmain, Circle, and Chain. The firm also manages a number of cryptocurrency hedge funds, providing clients with access to a diversified portfolio of digital assets.
The author of the report, Pantera Capital CEO Dan Morehead, has been investing in Bitcoin for the past 10 years, in which there have been six distinct up and down cycles. The fund has invested in “four crypto winters”, states Morehead in the report. This legacy experience investing in several boom/bust cycles infers the firm has a good grasp on the technical and fundamental dynamics affecting the market.
In the following chart, Pantera Capital presents a chart of why Bitcoin is at a cyclical bottom. The chart infers that from both a duration and aggregate total decline perspective, Bitcoin appears to be basing at historical norms. Of course, it is possible that price action deviates from these norms give the immense regulatory changes coming from regulators. But on the face of it, it is a rather reassuring chart in conjunction with the recent bounce from 2-year lows.
As we can see, the decline in Bitcoin from November 2021 to November 2022 was the median of the typical cycle—although this was the only bear market to completely wipe out the previous bull market, giving back 136% of the previous rally. The median drawdown length has been 307 days, while the previous bear market lasted 376 days. The median decline is -73% and the latest bear market ended at -77% decline.
During the last comparable decline between December 2017 and December 2018, Bitcoin ‘only’ shed 84% of its value.
Bull Run Just Getting Started?
While Bitcoin has recently emerged from a nasty multi-quarter bear mark, Pantera Capital presents data that infers that this new bullish impulse could have a ways to go—at least from a historical context.
Pantera data of previous bull cycle runs speaks of an mean increase of 40x and weighted-mean increase of 4x. Despite the recent surge above $24,000, the Bitcoin price had only increased approximately 2x off the lows. At publishing time, the price of Bitcoin was $21,553/BTC, according to Coindesk.
The mean and weighted mean are two statistical measures of central tendency that are used to describe the average value of a set of data.
The mean, also known as the average, is calculated by adding up all the values in a data set and dividing by the number of values. While the weighted mean takes into account the importance or frequency of each value in the data set. This is done by multiplying each value by a weight (representing its frequency or importance) and then dividing the sum of all the weighted values by the sum of all the weights.
In conclusion, Pantera Capital CEO Dan Morehead is maintaining a positive outlook for investors by stating:
“I think we’re done with that and beginning to grind higher. I believe that blockchain assets have seen the lows and that we’re in the next bull market cycle – regardless of what happens in the interest-rate-sensitive asset classes.”
If so, investors should expect that Bitcoin is firmly entrenched in its seventh bull cycle—destination unknown.