As the founder of the first U.S. cryptocurrency hedge fund, Dan Morehead has seen his share of bitcoin bear markets.
Speaking with CNBC on Wednesday, the Pantera Capital CEO said that he has a simple message for bitcoin investors selling into a market that has already experienced a 67 percent decline from its all-time high: stop overreacting.
"The main thing to remember is that bitcoin is very early-stage venture, but has real-time price feed — and that's a unique thing. People get excited about the price and overreact," said Morehead, whose investment firm has recorded a lifetime return of about 10,000 percent.
As CCN reported, the bitcoin price has endured a precipitous decline over the past several weeks, with analysts primarily attributing the movements to the growing realization among retail investors that the U.S. Securities and Exchange Commission (SEC) is unlikely to approve a bitcoin ETF this year. Last month, the SEC denied the Winklevoss twins’ latest bid to create such a financial instrument, and the agency has delayed ruling on nearly a dozen other bitcoin funds.
Morehead said that this hesitancy on the part of the SEC to approve a bitcoin ETF should not have come as a surprise and that investors should prepare to wait “quite a long time” if they hope to see one of these products trading on a regulated stock exchange.
"I still think it will be quite a long time until an ETF is approved. The last asset class to be approved for ETF certification was copper, and copper has been on earth for 10,000 years," he said. "The ETF rejection is the same story we've had for five years," he added. "The SEC has been very cautious with an ETF."
While investors are busy wallowing about the SEC’s reluctance to approve a bitcoin ETF, a move that many believe would help concretize cryptocurrency as a mainstream asset class, Morehead said that they are ignoring an announcement that could prove to be just as important: the world’s largest stock exchange operator is launching a crypto-focused subsidiary.
Created by Intercontinental Exchange (ICE), the operator of the New York Stock Exchange (NYSE), Bakkt has already inked partnerships with Microsoft and Starbucks to develop ways to take cryptoassets mainstream. Additionally, the firm will offer institutional investors a physically-settled bitcoin futures product, providing them with access to a regulated cryptocurrency custodian.
"That's huge news," Morehead concluded. "That is going to be a very profound impact over the next five or 10 years for the markets, and, to my mind, that's what people should be focused on."
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