Pantera Capital’s founder and Managing Partner, Dan Morehead, projects a bullish outlook for the digital currency ecosystem, particularly following last year’s crypto winter. This downturn was spurred by the collapse of Terra (LUNA), which saw the token lose 99.9% of its value due to a deep correlation with algorithmic stablecoin TerraUSD (UST) getting attacked and depegged.
Many crypto venture capital firms and hedge funds suffered significant losses due to their exposure to both tokens and parent company Terraform Labs. Among the affected firms were Three Arrows Capital (3AC), Celsius Network, and Voyager Digital. This led to fear, uncertainty, and doubt (FUD) gripping the investors, resulting in a year-long hibernation from crypto investments by many.
Additionally, digital currencies faced severe value drops after their multi-year highs, with the FTX Derivatives Exchange’s implosion further impacting the market. However, Dan Morehead believes the worst part of this crypto winter is now over. Referring to Bitcoin’s year-over-year return, he said, “It recently flipped positive and is now at 31%. We believe it’s been enough time that we can rally now.”
Encouraging indicators support Morehead’s positive predictions. For example, BlackRock, the world’s largest investment manager, submitted an application to the US Securities and Exchange Commission (SEC) for a spot Bitcoin Exchange Traded Fund (ETF) product. Previous crypto ETF applications have faced rejection by the SEC, but the industry remains optimistic that BlackRock’s stellar track record would considerably improve the success rate for approval.
If this projection materializes and the Bitcoin ETF is approved, the Bitcoin market may experience significant expansion as fresh funds flow into the ecosystem. Such growth would not only benefit Bitcoin but potentially help revive the entire digital currency space, contributing to a re-emerging optimism among crypto enthusiasts and investors.
Ultimately, though the industry has seen a tumultuous period, the recovery of digital currencies, potentially underscored by the approval of new investment vehicles like the Bitcoin ETF, could pave the way for an upward trajectory. While this positive outlook is encouraging, investors should remember that market dynamics are subject to change and should always conduct thorough research before putting their money into cryptocurrencies.
Source: Coingape
