CEO and founder of leading blockchain venture capital fund Pantera Capital, Dan Morehead, says digital assets will be the “best place” to store capital after potential fallout from US Federal Reserve interest rate hikes .
Stock and crypto market investors are currently obsessed with which direction the Fed might take to combat rising inflation, which has so far exceeded 7.5%. month.
Bitcoin and crypto markets have often moved in correlation with stock market trends, however, Morehead argued in its Feb. 16 bulletin, that bonds, stocks and real estate will bear the brunt of the Fed’s “massive policy reversal” in raising interest rates.
Although the crypto market has been suffering from a downturn since late 2021, the CEO suggested that digital assets would be the “best place” to store capital during the fallout from Fed actions:
“I think our markets will soon decouple. Investors will think: Bonds are going to be crushed as the Fed moves from the only buyer on Earth to seller. Rising rates will make equities and real estate less attractive.
“So where to invest when stocks and bonds fall? (Normally they are negatively correlated.) Blockchain is a very legit place to invest in this world,” he added.
#Bitcoins is down -19% year over year – during a period when the Fed printed $5 trillion – seems cheap.
— Dan Morehead (@dan_pantera) February 17, 2022
To add to his point, Morehead also pointed to a previous statement he made on an investor conference call earlier this month in which he pointed out that asset classes such as gold and crypto do not correspond directly to interest rates as bonds do.
“While blockchain is not a cash flow oriented thing. It’s like gold. It can behave very differently than interest rate oriented products. I think in Ultimately, investors will have a choice: they have to invest in something, and if rates go up, blockchain will be the most attractive,” he said.
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Morehead admitted that while the crypto market seems to have reacted to Fed moves lately, the value proposition of digital assets has remained the same, while the price drop may also be a result of the end of the crisis. US fiscal year:
“Part of the crypto selling pressure has been unintended tax positions. Imagine a trader actively buying and selling BTC, ETH, XRP, etc. Excellent year. Made a ton of money. Everything kept in the markets.
“There was $1.4 trillion in cryptocurrency capital gains created last year. That could have caused a good chunk of the recent sales,” he added.
He noted, however, that there could be a lot of ups and downs before the crypto market takes off again.