Tradecraft Capital, LLC, a crypto asset investment company, issued a statement in this time of market turmoil, predicting another significant drop in the cryptocurrency marketplaces prior to the expected bull run that many are anticipating.
As the regular markets attempt to understand the effects of the coronavirus pandemic, which includes not only the devastating impact of the virus itself but the ripples created via a near-nationwide policy to stay at home that reaches every corner of America, it is no surprise that many pundits are predicting that the worst is yet to come in the traditional markets. The crunch in the global credit system with the dollar shortages in the repo markets domestically and the Euro-dollar market overseas, coupled with the oil market crisis and the global pandemic, have created a significant deflationary event.
However, many crypto enthusiasts believe the worst is over for cryptocurrency and, following its significant drop and subsequent rebound in March, point to the incredible stability of Bitcoin over the past weeks as a hallmark that the most-well known crypto-asset is about to take center stage as a truly uncorrelated asset and take off to new highs.
Jake Ryan, founder and CIO of Tradecraft Capital disagrees, at least in the short term. “Markets short-term are going to follow human emotion and we’re seeing deaths rise at an extreme rate here in the US,” states Ryan. “I expect we are going to see another drawdown in risk assets and that includes crypto assets. In deflationary crashes, like the one we are experiencing, all assets correlate to 1. We expect crypto assets to follow suit, and our macro-analysis and internal systems are all reinforcing this view. My base case for timing would be a drawdown beginning in April, though it could extend into early May. We expect Bitcoin is re-test the 2018 lows,” says Ryan. For those who want to get into crypto at lower prices, this could be good news. “Historically, after deflationary crashes, highly liquid assets with no counterparty risk recover first. We saw this in 2008 with gold.”
Tradecraft Capital bases its prediction on its proprietary model which drives fund investment and has outperformed its benchmarks since inception. Ryan has a crypto investing book scheduled to be published by Wiley in Q1 2021.
Bitcoin, the most well-known crypto asset, was created in 2008 as an answer to the financial crisis at that time. It is designed to be digital gold and addresses many of the challenges the markets are seeing today. The fact that it has no counterparty risk, is highly liquid, trading 24/7 globally, and has demonstrated behavior as an uncorrelated asset avails Bitcoin as attractive speculative safe-haven to many investors. In addition, the appointment of Brian Brooks, a crypto-enthusiast and vocal supporter of a digital dollar, to the second highest position in the US treasury demonstrates a marked shift in the US Government’s policy towards crypto, and points to a bull run.
Source: PR Newswire