Pantera Capital CEO: Break away from your herd mentality! Now may be the best time to buy Bitcoin

Pantera Capital CEO Dan Morehead stated that the large-scale sell-off of cryptocurrencies is triggered by panic sentiment, and from various data perspectives, Bitcoin is not considered overvalued.

The Innate Herd Instinct of Humanity

In a monthly open letter released on June 14th, Dan Morehead pointed out that the current market sentiment is dominated by panic due to a series of bearish news. These news include Chinese regulations, the U.S. tax day, and Musk's change in attitude. The venture capitalist stated in the letter:

"Humans have an innate herd instinct. That's why our ancestors survived, those who were too prideful to join in were 'Darwined' out."

When the market is soaring, our nature drives us to buy; when it crashes, we just want the suffering to stop. But fear and greed are often the biggest enemies in trading markets. Dan Morehead pointed out that Chinese regulations are not new and, in fact, during previous Bitcoin bull cycles, China would implement "cyclical" strict regulations.

Furthermore, Dan Morehead also added that the impact of the U.S. tax day on the investment market is expected and not a significant bearish sign. So, is Bitcoin currently undervalued by the market?

Bitcoin Not Overvalued

The venture capitalist pointed out that historically, when market prices are "far below trend," it's an excellent buying opportunity. Looking at the trend deviation indicator chart for Bitcoin released by the company, it shows that the current market price of Bitcoin is 36% below its index trend over the past 11 years. Dan Morehead stated that in Bitcoin's history, only 20.3% of the cycle intervals were below the 0 axis. Moreover, even the peak Bitcoin reached in April this year, surpassing $60,000, was only slightly above the trend value (0 axis), showing a significant difference from past peaks.

For new investors, it’s best to buy when the market is well below trend. Now is one of those times.#Bitcoin has only been this “cheap” relative to its trend 20.3% of the past 11 years.

More perspectives on market timing in our June investor letter: https://t.co/AOvhFyxBJh pic.twitter.com/2bsxbw5Iay

— Dan Morehead (@dan_pantera) June 16, 2021

On the other hand, Dan Morehead further pointed out that looking at the four-year year-over-year return chart for Bitcoin, it is still at a low point, indicating that Bitcoin is not overvalued.

Finally, Dan Morehead concluded:

"Unless it's causing serious harm to your physical or financial well-being, please resist the urge to close your positions temporarily... For new investors, it's best to buy when the market price is below the trend value, and now is the right timing for that."