Bitcoin is more than ‘a ZIRP phenomenon,’ says Pantera

Bitcoin is hitting record after record in a high-interest environment.

And that’s a big deal, says Pantera Capital.

“We’ve shared our view that blockchain should be able to trade independently of rising rates — that it has no mathematical connection to rates like bonds, stocks, and real estate do,” the investment firm wrote in a report this week.

The largest cryptocurrency on the market enjoyed a serious rally in 2021, during which the Federal Reserve maintained a zero-interest-rate policy or ZIRP. In parallel, the central bank issued a slew of economic relief measures amid the pandemic, such as distributing stimulus checks to citizens.

It was a heady period marked by the meteoric rise of so-called meme stocks like GameStop and Bed Bath & Beyond.

Once the pandemic era ended and the Fed flipped hawkish, aggressively raising rates to curb inflation, Bitcoin began to plummet.

Investors’ conclusion?

“Crypto was just a ZIRP phenomenon,” Pantera wrote, highlighting critics’ sentiment.

Today, interest rates are the highest they have been in years, and Bitcoin is trading at nearly $69,000. As such, Pantera is happy to declare validation.

There is just one additional consideration the firm excluded from its report: Bitcoin ETFs.

‘Hot as the iron gets’

On Thursday, Bloomberg analyst Eric Balchunas tweeted that BlackRock’s spot Bitcoin ETF “is up over 50% and has taken in $15 billion in new cash in three months.”

He said both metrics are twice as high as any other ETF from the Wall Street heavyweight.

“That is about as hot as the iron gets,” Balchunas said.

After years of back-and-forth between prospective issuers and the Securities and Exchange Commission, the arrival of the industry’s first roster of Bitcoin ETFs has catapulted Bitcoin into a new era.

Notably, the approvals have created a new source of demand. It’s even caused a shortage.

Wall Street banks have since turned to at least one Bitcoin mining company to buy their stash, DL News reported last week.

Crypto market movers

• Bitcoin was down nearly 4% over the past 24 hours to $67,600.
• Ethereum is down worse, having lost 5% overnight and trades now near $3,300.

What we’re reading

• Hong Kong’s crypto scene gets happy with Bitcoin ETFs in the air and promotions everywhere — DL News.
• FTX founder Sam Bankman-Fried to challenge 25-year prison term — Milk Road.
• Why Do Kwon’s extradition to the US looks more likely — Unchained.
• Robert Kiyosaki backs Cathie Wood’s $2.3m Bitcoin price prediction — Milk Road.
• Uniswap taking page from Coinbase’s playbook will ‘backfire,’ former SEC official says — DL News.

Liam Kelly is DL News’ Berlin-based correspondent. Got a tip? Email him at liam@dlnews.com.