digital asset investment company Pantera Capitalthinks that cryptocurrencies are currently trading at fairly cheap prices.
The firm believes that Bitcoin is not overvalued, despite falling from its all-time high of around $70,000 to $40,000 last November.
“In the notes we first shared in June 2021, the demonstrations show some Bitcoin (BTC) We have updated our charts. These charts are structured to confirm our notion that markets are not overvalued and are actually currently undervalued fairly cheaply.
Annual returns have never been literally off the charts as they have at past highs. It’s down 11% year-on-year – at a time when the Fed was printing $5 trillion at the time – it looks cheap. Bitcoin’s four-year yield is at the low end of its historical range. Again, it doesn’t seem overvalued. ”
Pantera added that prices could drop further due to the “tax period”. The firm thinks that crypto traders and investors can sell their assets to pay their taxes due on April 18 this year.
“Part of the crypto selling pressure has been undesirable tax positions… The $1.4 trillion created last year cryptocurrency unit had a capital gain. This could have resulted in a good portion of recent sales.
Tax Day could be critical for crypto prices. After three previous big spikes – 2013, 2017 and 2020 – and this one peaked 35 days before Bitcoin Tax Day 2021 – then it created a local bottom as investors sold their holdings to cover the taxes accrued in 2020.”
Pantera thinks that the selling pressure may be triggered by a large number of traders who are unaware that crypto transactions are taxable.
“Many crypto traders are fairly new to investing. You can imagine a person buying as much Bitcoin as they can… And then the tax preparers say they owe them 34% of the earnings. Since they are “all in one” in crypto, the only way to raise cash to pay tax bills is to sell some crypto. Prices drop until Tax Day.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.