Dan Morehead, CEO of Pantera Capital which focuses exclusively on digital currencies and blockchain technology, said bitcoin has hit a buy signal after falling some 75% to then sideway at around $8,000 for the past six days.
“For those who are new to Pantera who might think a fund manager like Pantera would always be saying ‘Today’s a great day to get long.’ we’ve only made four cryptocurrency trade recommendations in seven years: three buy recommendations and one sell/it’s-going-to-go-sideways-for-a-while,” Morehead says.
Their rational is bitcoin’s 200 days moving average, which is – as the name implies – bitcoin’s average closing price over the last 200 days.
“Bitcoin just hit that rare buy signal again. It just crossed below its 200-day moving average,” Pantera says. While a textbook of 200d as an indicator says:
“On the surface, it seems as though the higher the 200-day moving average goes, the more bullish the market is (and the lower it goes, the more bearish). In practice, however, the reverse is true.
Extremely high readings are a warning that the market may soon reverse to the downside. High readings reveal that traders are far too optimistic. When this occurs, fresh new buyers are often few and far between.
Meanwhile, very low readings signify the reverse; the bears are in the ascendancy and a bottom is near. The shorter the moving average, the sooner you’ll see a change in the market.”
In this fourth trade recommendation over seven years, and seemingly primarily based on the 200d moving average, Pantera has thus apparently turned bullish.
They do not mention other cryptos in their trade recommendation, but they reveal they hold a diverse portfolio of countless of digital currencies, tokens, and business equity.
All of the three big ones are there: eth, bitcoin, bitcoin cash. Ripple is there through what appears to be investment in the team or the company. Same for Brave (BAT). While Zcash is there both through the team and through coin holding.
Many familiar names are on there, including some surprising ones such as changetip which no longer operates as far as we know.
Yet there are quite a few coins/tokens that we’ve never seen before, even in just name. Such as pryze, which coinmarketcap doesn’t know. Presumably because their ICO is still on-going or maybe it was a pre-sale or even a closed sale.
The main take-away from this portfolio is a suggestion that Pantera is not playing tribalistic. They’re diversifying their funds, probably aware some will fail while some might succeed.
Usually, however, when one talks of diversification they talk of different asset classes, such as tokens, coins, stock, commodities, and so on. But then you’d want to diversify within each class too, which appears to be the approach Pantera has taken.