100%+ BTC price gains? Bitcoin faces ‘massively overvalued’ stocks
Bitcoin exhibited a classic "Uptober" performance, showing significant price gains in October. However, forecasts indicate that risk assets in various markets could be at risk of experiencing a substantial contraction.
Dan Morehead, CEO of Pantera Capital, a prominent figure in the cryptocurrency industry, has expressed optimism regarding Bitcoin's future performance. In an interview with CNBC, he shared his belief that Bitcoin will continue to deliver over 100% annual price gains.
While Bitcoin experienced a strong month in October, closing with a 29% gain and reaching 18-month highs, Morehead and others are concerned about the state of traditional stocks, which he describes as "massively overvalued." He pointed out that equities are overvalued because the price-to-earnings (P/E) ratio is at a level similar to when interest rates were falling, despite the current environment of higher and rising rates. Morehead mentioned that, based on historical averages, equities should be 23% lower given the current interest rate environment.
He also noted changing macroeconomic conditions in the United States, with interest rates reaching their highest levels in over two years. While Morehead did not predict an immediate 43% market decline, he suggested that equities could experience prolonged periods of flat performance, as seen in the 2000s and the 70s-80s.
Despite his concerns about traditional equities, Morehead expressed confidence in both Bitcoin and Ethereum (Ether). He predicted that Bitcoin will more than double in value every year, in line with its historical trend growth of 145% annually over 14 years.
However, there are concerns that Bitcoin's positive performance may be followed by a significant retracement ahead of the 2024 block subsidy halving. Some analysts, such as Filbfilb, co-founder of DecenTrader, suggest that this retracement could occur around March next year, potentially influenced by the state of traditional equities. It's worth noting that Bitcoin has recently shown reduced correlation with traditional stock markets, which some consider a positive sign for its status as a digital store of value and hedge against economic uncertainties.