Fed's hawkish rate cut tone is behind bitcoin pullback, says Pantera's Jiang

Core Viewpoint - Bitcoin has recently experienced a significant decline, dropping to around $93,000, which is a 10% decrease in just one week and has turned negative for the year, raising questions about whether this marks the bottom or if further declines are expected [1]. Market Dynamics - A six-month rally in the crypto market has led to a reasonable consolidation phase, influenced by macroeconomic factors such as AI capital expenditures, credit concerns, and the Federal Reserve's plans for rate cuts [2]. - Bitcoin, being a higher growth asset, is subject to higher volatility, with historical patterns showing multiple 30% drawdowns during uptrends, making it premature to declare a sustained downtrend at this point [3]. Leverage and Market Sentiment - Recent events have seen a significant reduction in leverage within the Bitcoin ecosystem, following a large deleveraging event earlier in October, which has already caused considerable market pain [4][5]. - Negative reflexivity and market sentiment continue to play a role in driving Bitcoin's price movements, but the current market dynamics suggest a shift towards reduced volatility as institutional ownership increases [5][6]. Institutional Investment - Institutional ownership of Bitcoin has risen to 16%, up from virtually 0%, indicating a trend towards less sensitivity to market volatility and potentially smaller drawdowns in the future [6]. - The involvement of prestigious institutions, such as Harvard University's endowment fund investing in Bitcoin exchange-traded funds, highlights the growing institutional interest in the asset class [7]. Long-term Investment Perspective - The company views itself as a long-term investor in the digital assets ecosystem, with its Bitcoin fund launched in 2013 achieving nearly an 80% compound annual growth rate (CAGR) since inception, which is exceptional for over a decade [8][9]. - Despite the potential onset of a bear market, the company believes that a 30% pullback presents an interesting opportunity for gradual allocation into Bitcoin, given its historical performance and growth potential [9].