Bitcoin is Flashing a Rare Buy Sign; We Discuss Who Sees It and Why

To understand how Bitcoin has plenty of room to run, take a look at its price as it relates to its 200-day moving average. Right now, that technical indicator is flashing “buy,” hinting at there being a huge rally ahead.

That’s a message from Pantera Capital’s CEO Dan Morehead who appeared on CNBC’s Fast Money Wednesday afternoon.

Let’s get right to what he had to say about Bitcoin.

Bitcoin has been growing at a clip of 165% for each of the past six years Morehead’s Pantera has been in business. He said:

“Something that’s growing that fast hardly ever gets down below its 200-day moving average. When it does, it‘s a very good time to buy. It did five years ago when we launched our first fund, and it just crossed that earlier in April.”

Morehead also noted that technical traders use different averages to decide when to get into a trade. He said that when Bitcoin gets back to its average, that means it’s time to buy again. This is especially the case since it’s been trading in a vertical line for the past eight years.

The value of Pantera’s Bitcoin Fund has been cut in half since the beginning of the year, which Morehead said is correlated with the market.

Still it has returned a jaw dropping 25,000% or more to investors over its life.

Morehead said there are several milestones that have already been achieved that have served to attract more institutions to the crypto space, but at least one more remains.

Calling them creditlization milestones, Morehead said the biggest one that has already been reached relates to the futures contracts launched by the CBOE and CME Group (NASDAQ:CME).

The last big milestone relates to the creation of a U.S. Securities and Exchange Commission regulated custodian.

“When we launched our first [crypto] fund, we had all the standard things you’d have in a normal hedge fund. But you don’t yet have a regulated custodian. I think that’s the last piece.”

He added that this last milestone could be achievable this year, noting that some firms have announced want to do crypto custody within next 12 months, and that will be a very big moment.

Some estimates place the number of crypto funds at 200. That’s hard for some, including Morehead, to believe. He noted that there are only a handful of funds that have been around for more than a year.

“You read there are 200, but I haven’t met 200 different managers so I don’t know if that really exists. I imagine there will be a big shake out with the funds.”

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Most of these funds are long-only funds. To weather downdrafts, Morehead said his firm has a long/short fund. This strategy contributed to it being up over the last four months when Bitcoin was getting killed.

“I think this is a rare opportunity to get into something 65% below its highs. You don’t get that opportunity very often. We dynamically trade all the different currencies. There are about 60 that are liquid enough for us to trade, like Bitcoin, Ripple and Zcash.”