Bitcoin is not having a good morning. The world’s largest cryptocurrency dropped below $8,000 on Monday, dipping 3.5 percent over the 24-hour period. The selloff came as part of a wider market dip, with 84 of the 100 largest coins dropping in value. One expert, writing about the cooldown after a week of gains, sees this is a momentary lull on the way to new heights.
Dan Morehead, CEO of cryptocurrency hedge fund Pantera Capital, wrote in a Medium post on Thursday that $6,500 represents a low point for the bear market, and that the “vast majority” of the coming 365 days will be above that price, declaring it “highly likely” to have exceeded $20,000 within the year. Morehead points to a number of factors: a compound annual return rate of 167.4 percent over the past five years that suggests now is a low point for Bitcoin, a network effect that stops people from moving to alternatives, and human nature that causes people to invest in rising markets.
Morehead used the above chart to outline how the price has changed from its 200-day moving average, noting that it’s now deviated below the moving average. Its recent dip to $6,500 followed by a rise marks the end of a four-month decline from its January highs. Morehead notes that had you invested $100 when Bitcoin last dipped below the moving average and sold the same time next year, you would have seen returns of 285 percent.
The CEO also gave an interview with CNBC recently where he outlined why alternative cryptocurrencies, which make up around 60 percent of the market, probably won’t stop Bitcoin’s rise. Comparing it to photo sharing, Morehead said “you could set up a photo sharing site, and if you can get two billion people to use it, it’ll be more valuable than Facebook. It’s just difficult. Bitcoin already did it, it’s been there for nine years, it has 24/7 uptime, it’s hard to compete with.”
By Morehead’s calculations, Bitcoin should surpass the $20,000 mark at some point before April 12, 2019. If it does so, it’ll surpass its previous all-time high of around $19,500 during the mid-December hype.
Morehead’s not the only person to predict a further rise. Fundstrat co-founder Thomas Lee sees Bitcoin reaching highs of $25,000 this year.