- New report from Pantera Capital has suggested market conditions are right for a strong crypto bull market in the next 18 to 24 months.
- It predicts that the disastrous events of the past few years—such as historically weak stock and bond markets and the FTX collapse—are unlikely to happen again in the next 10 to 15 years.
- Author claims good market conditions combined with emerging regulatory clarity, plus the Bitcoin halving and improved crypto tech, set the stage for huge growth in crypto.
A new report from Pantera Capital released last week suggests that crypto is entering its fourth bull market. The report cites the relatively calm market conditions and the slowly emerging regulatory clarity in the US as key factors laying the foundations for strong growth in crypto markets over the next few years.
Pantera Capital is an institutional asset manager that invests in digital assets and blockchain companies, with US$4.6 billion of assets under management.
Lack Of Disasters Is A Big Deal
The report, which was written by Pantera Capital Founder, Dan Morehead, is titled ‘An Absence Of Bad Things’. It emphasises that the past few years have been very bad for investors in general and absolutely disastrous for crypto, but that such bad conditions are unlikely to happen again for a long time.
According to the report, 2022 was the worst year ever for bond investors and the worst year since the Great Depression for “classic 60/40 stock and bond” investors. It also highlights how bad the past few years have been for venture capitalists, with IPO proceeds down 95% and the number of projects funded down 85% compared to the previous year.
In addition to these broader economic conditions, crypto suffered the year from hell in 2022, with the FTX and TerraLuna collapses triggering a market meltdown that saw the combined crypto market capitalisation plummet by 70%.
In my opinion, these are all once-in-a-generation-type weird things. Nobody’s going to be lending to levered crypto hedge funds without collateral and no transparency again for 10 or 15 years. (Having seen 25 years of cycles, I do know that somebody’s going to do it again in the next generation!).
Dan Morehead, Pantera Capital FounderMorehead said that these monumentally bad events are now largely behind us and it’s extremely unlikely disasters of this scale will strike again in the next 10-15 years:
Since none of those could kill blockchain, the absence of those super bad things is, on the margin, a massive positive.
Dan Morehead, Pantera Capital FounderSome Regulatory Clarity Emerging in US
The second big positive, according to Morehead, is the gradual emergence of regulatory clarity in the US, which is slowly seeing more institutional investment enter Web3.
The report claims that positive rulings in the Ripple case and the Grayscale case have moved the industry in the US forward, and the launch of the Bitcoin spot ETFs has encouraged investors— who had been wary of digital assets—to take the plunge.
Coupled with improved macro-economic conditions, the upcoming Bitcoin halving (which is expected to happen in April) and technological improvements to Ethereum, such as more efficient layer 2s, Pantera Capital sees a lot of upside in crypto in the medium term:
I think we’re in the beginning of the fourth big cycle now…With stocks back at record highs, they can invest in private markets again, and so I think the next 18 or 24 months are probably going to be a strong bull market for crypto.
Dan Morehead, Pantera Capital FounderHe added that we’re currently seeing something of a perfect storm of market conditions for a strong crypto bull run:
This is a pivotal moment with the removal of these traumatic, horrible occurrences in the capital markets and blockchain space from the past couple years, coupled with positive things like the halving and regulatory clarity – all unfolding simultaneously.
Dan Morehead, Pantera Capital Founder
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