Economist and crypto trader Alex Krüger says Bitcoin and Ethereum may have more downside potential, but a new cryptocurrency rally is almost in sight. Pantera CEO Dan Morehead also argues that Bitcoin and altcoin declines are over.
When will the next cryptocurrency rally start?
Alex Krüger says the decline in crypto markets is a reasonable response to the US Securities and Exchange Commission’s (SEC) shutdown of Kraken’s staking services. However, he predicts that the crypto markets could rally in the next few days at the earliest. This economist makes the following assessment:
The next bull run will either start with the CPI or at the end of the month. BTC and ETH still have round levels to be surpassed. There is no market stress. It should be seen as a healthy retreat. It would be a full bear market if only the CPI increased by 0.2%.
What do the SEC’s actions on staking services mean?
The CPI, which tracks the rate of change in US inflation over time, is scheduled to be announced on February 14. It’s a closely watched metric as traders see the new data as an indication of the Federal Reserve’s next move in its anti-inflation efforts. CPI data below the consensus expectation is often seen as a bullish signal, as it may prompt the Fed to consider stopping aggressive rate hikes. Krüger also predicts that the SEC will likely go after Coinbase for its staking services. In this regard, he says:
Don’t think so, as the SEC is definitely after Coinbase. Now we enter the uncertainty before the CPI. Until then, there is no advantage for me. Collect the next two weeks. Then we’ll go to the moon.
According to Krüger, the SEC’s actions against US crypto exchanges could have a positive impact on the industry later on. The economist says the positive foreshadowing is that banning US exchanges/custodians from offering staking services pushes staking off-chain or overseas. Krüger continues his assessment as follows:
ETH is no longer decentralized and under the control of US regulators. Decentralized ETH is better ETH. It’s going to start in a few weeks of this turn… It’s like China banning Bitcoin (for the last time!) and narrative commentators making it ‘This is good for Bitcoin because now mining will be concentrated in the US instead of the US’.
“Bitcoin is already in the next bull market cycle”
cryptocoin.comAs you follow, Bitcoin price action has pulled back a bit after gaining 40% in January. Some market participants still insist that there should be new macro dips in crypto assets. While the timing of such a scenario will vary, there is no consensus on how the market will recover. But for Pantera CEO Dan Morehead, the time has come to reverse the bullish trend in crypto. Morehead shares the following comment:
Pantera has gone through ten-year Bitcoin cycles and I have traded from similar 35-year cycles. Whatever happens in interest rate sensitive asset classes, I believe Blockchain assets are seeing bottoms and we are in the next bull market cycle.
This perspective differs from the majority in that it sets aside the discussion between crypto price correlation and risky assets like stocks. But it forms the backbone of some other forecasts for 2023. Morehead argues that despite the previous bull market falling below its all-time high following the FTX debacle in November 2022, Bitcoin’s pullback from all-time highs places the market in historical context. In this context, he makes the following statement:
The decrease from November 2021 to November 2022 was the median of the typical cycle. This is the only bear market that has completely eliminated the previous bull market. In this case, it returns 136% of the previous rally. The median decline was 307 days and the previous bear market was 376. The median drop was 73%, with the latest bear market ending at 77%.
Going forward, a trend change will occur as Bitcoin hits new record highs. “I think we’re done with that and we’re starting to get higher,” Morehead adds.
Could regulations be a savior for cryptocurrency?
A similar optimism is towards decentralized finance. Pantera still plans a year to ‘rebuild trust’ in centralized finance (CeFi) above all else. Morehead claims this will be necessary in light of the multiple institutional failures over the past year that have fueled the cryptocurrency bear market. In this regard, he records:
2022 was a year of booms and big dips, especially regarding CeFi. Within months, the world saw Three Arrows Capital collapse, Do Kwon’s LUNA disbanded, Voyager Digital collapsed, and Sam Bankman-Fried’s (SBF) FTX empire shattered. What do all these events have in common? Headlines like to suggest that it’s crypto or Web3 that fails. But, in fact, it was a composite of bad actors in jurisdictions with no clear regulations. If 2022 is the year to break the rules and fail, I believe 2023 will be the year organizations follow the rules and reap the rewards for doing so.
While Morehead does not mention the current regulatory battle involving the SEC, he envisions CeFi regaining its worldwide influence ‘at the level of jurisdiction’.
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