Bitcoin Is Likely to Drop 50% Before Another Rise
According to a former hedge fund assistant now-turned digital currency investor, Bitcoin is an investment that poses a great risk which could easily plunge 50% in the next weeks to last month’s levels.
On the other hand, founder and CEO Pantera Capital, Dan Morehead, predicted on Tuesday that Bitcoin will most likely reach higher values that the current price of $18,200.
Morehead, who bought bitcoin when it was just $72, said that for the big blockchains like bitcoin, Ethereum and ripple, we’re in the “first innings of a multidecade thing” and that there will be some ups and downs, but we’re still in the early phases.
On CNBC’s “Squawk Box”, he said that bitcoin “could be down 50% next week…where it was a month ago,” and that in a year, “it’ll be much higher than it is today.”
Morehead, who started out as a mortgage-backed security trader at Goldman Sachs, identified bitcoin and other cryptocurrencies as “digital gold”. He also had a position at Tiger Management, a hedge fund founded by prominent investor Julian Robertson, as head of macro trading and CFO.
Also, Morehead founded Pantera Capital in 2003, an institutional investment firm which deals exclusively with digital currency and related services. Pantera launched its first cryptocurrency fund in 2013. The company claimed the fund gained 60% in November and December, and over 12,000% in the past four years.
In the meantime, cryptocoin mining, the process that uses performant hardware and electricity to release new coins, is gaining more and more adherents. They also added that “There was a period where it was doubling every six weeks. So it’s like Moore’s Law on crack,” and that the mining industry has recently increased in difficulty and has become extremely competitive.
CME, the world’s largest futures exchange, launched on Sunday its own Bitcoin futures, a week after Cboe launched their bitcoin futures. Many believe that the launch of bitcoin futures will lead to legitimization of digital currency, while others regard bitcoin as an imminent “bubble”, and the futures are a bet against the cryptocurrency trend.