A new report by Bitcoin alpha hedge fund Adamant Capital has revealed that Bitcoin is in the accumulation stage in this bear market. According to their drawdown and volatility analyses, Bitcoin has recovered from capitulation and investors are looking at long-term horizons again. The report suggests that Bitcoin may be undervalued.
Adamant also believes that volatility for Bitcoin should decline in future market cycles as more value investors come in to the market. While lower BTC prices may still be possible, Bitcoin’s fundamentals such as the Lightning Network are continuing to gain momentum.
Another fundamental driver of the Bitcoin prices is the increasing ‘financialisation’ of the Bitcoin industry. From Bitcoin futures to custody solutions, Wall Street has shown a keen interest in this new asset class. In the long-term, millennials are also expected to more receptive to Bitcoin as they have grown up with peer-to-peer protocols like BitTorrent and are among the early adopters of Bitcoin.
In addition, the report goes on to say that the long -term risk-reward ratio for Bitcoin is the most favourable among any liquid instrument in the world. Adamant expects Bitcoin to be range-bound between $3000-$6500 for some time before the emergence of a bull market.
The report says:
Supported by over 10 years of infrastructure development, we believe the stage is set for mass market adoption in the coming five years. In our assessment, during this phase Bitcoin will become widely recognised as a portfolio hedging instrument and reserve asset, and will begin making significant inroads as a payment network.Tuur Demeester and Michiel Lescrauwaet, Adamant Capital
You can read the entire report here.