Bitcoin (BTC) The market's tendency to collapse by more than 80% after posting strong bull runs could come to an end.
That is according to a new report Posted by California-based hedge fund Pantera Capital. In detail, the report notes that recent periods of BTC price declines have been less severe than in the past.
For example, in 2013-15 and 2017-18, Bitcoin plunged as much as 83% after surpassing close to $ 1,111 and $ 20,089, respectively. Similarly, the cryptocurrency's bull run in 2019-20 and 2020-2021 led to massive price corrections. However, the scales of their subsequent pullbacks were -61% and -54%, respectively.
Dan Morehead, CEO of Pantera Capital, highlighted the steady decline in selling sentiment after the 2013-15 and 2017-18 bear cycles, noting that future bear markets would be "less deep." He explained:
"I have long advocated that as the market becomes broader, more valuable and more institutional, the breadth of price changes will moderate."
The statements came as Bitcoin renewed its bullish strength to retest its current high of close to $ 65,000.
BTC / USD rallied above $ 60,000 for the first time since early May, when the U.S. Securities and Exchange Commission approved Bitcoin's first exchange-traded fund (ETF) after years of rejecting similar investment products.
The approval of ProShare Bitcoin Strategy ETF raised expectations that it would make it easier for institutional investors to gain exposure in the BTC market. That also helped Bitcoin erase almost all losses incurred during the April-July downturn cycle, as the price of BTC doubled to regain levels above $ 60,000.
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Morehead cited the popular stock-to-flow modelโWho studies the impact of Bitcoin "halve"events on prices, to rule out a similar bullish outlook for the cryptocurrency. He noted that the first halving reduced the new Bitcoin issuance rate by 15% of the total outstanding supply (about 10.5 million BTC) , which led to a 9.212% rally price of BTC.
Similarly, the second halving decreased the supply of new Bitcoin by a third of the total Bitcoins in circulation (~ 15.75 million BTC). It led to a bull run of 2.910%, almost a third of the previous one, thus showing a slightly less impact on the price of Bitcoin.
The last halving recorded was on May 11, 2020, which further reduced the amount of new BTC against circulating supply with Bitcoin rebounding by more than 720% since then.
"The flip side of the coin is that we probably won't see more than the 100-times-a-year rallies either," Morehead said, adding:
Logarithmically displayed cycles make today's level look cheap to me.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade move involves risk, you should do your own research when making a decision.
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