Pantera Capital predicted a rise in bitcoin’s value in the coming weeks, despite recent volatility in the cryptocurrency market. According to the investment company, “Tax Day” could be one of the propellers. The company also stated that the cryptocurrency industry could soon seperate from traditional financial markets, and begin trading independently.
The Tunnel is lit by Light
The last few months of Bitcoin have been very bearish. Many bitcoin supporters expected it to trade at $100,000 by 2021. However, the price ended the year below $50K and there were more declines in the beginning of the new year.
The February 24th trading day was another bad one. This was due to the significant price declines caused by the Ukraine-Russian military conflict. BTC is now at $39,000, having recovered the majority of its losses.
Pantera Capital’s report, “The Next Mega Trade”, outlined the reasons why Bitcoin could soon resume its bull run. One of these is the “Tax Day” which is this year on April 18.
The company reminded investors that bitcoin’s value soared 35 days before the event in 2013, 2020, 2021 and 2021 (previous large run-ups). The asset lost ground each time around that date because investors were selling their holdings to pay taxes.
This makes sense. Many crypto traders are still new to investing. Imagine a person buying as many bitcoins as possible. They are “all in” on crypto and want to raise money to pay their taxes. The only way to do this is to sell crypto. The price of crypto drops in the days leading up to Tax Day.
Crypto could gain independence from financial markets
Pantera Capital also spoke out about Fed’s policies in the COVID-19 crisis. Pantera Capital called the combination of mass printing fiat currencies, manipulation of Treasuries and mortgage of bonds “clearly incorrect”.
The rising inflation and economic turmoil within the US borders were also blamed by Pantera Capital. Pantera Capital stated that there is a bubble and the Fed will need to raise interest rates further. This sounds good news for digital asset universe, according to CEO Dan Morehead.
“I believe that the markets are getting it wrong. The rise in interest rates, which I thought was obvious that it would happen, isn’t really bad for crypto. It is also much more favorable for crypto prices than other asset classes.
Pantera Capital believes that the cryptocurrency industry will become a financial niche of its own. This will mean that fluctuations in traditional monetary market will no longer be a concern.
“And so, we think that crypto will decouple with traditional markets over the next few weeks and start trading on its own again.”
Marla Brooks – Financial Analysis
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