Pantera CEO: Cryptocurrencies are the “best place” to store assets during Fed rate hikes
Dan Morehead, CEO and founder of leading blockchain venture fund Pantera Capital, claims that cryptocurrency will be “the best place” to store capital against the potential risk of rate hikes by the Federal Reserve United States (FED).
Investors in the stock and crypto markets are currently trying to predict what the Fed can do to combat rising inflation, which has peaked at 7.5% so far this month.
Bitcoin and crypto markets often move in correlation with trends in the stock market; However, Morehead arguments in Wednesday’s news that bonds, stocks and real estate will be in a bad spot if the Fed hikes interest rates.
Although the crypto market has been in a downturn since late 2021, the CEO believes digital assets will be the “best place” to store capital for now.
“I think our market will decouple soon. Investors think bonds will be crushed as the Fed drives the last few buyers out of the market. Rising interest rates will make stocks and real estate less attractive. So where do people invest when both stocks and bonds are falling? Blockchain was a very serious place to invest back then.”
He said Bitcoin’s price is now down just 19% year-on-year, which is too cheap considering the Fed printed $5 trillion over the same period.
#Bitcoin Down -19% year-on-year – at a time when the Fed has printed $5 trillion – looks cheap.
— Dan Morehead (@dan_pantera) February 17, 2022
To round out his point, Morehead also highlighted a statement he made during an investor conference earlier this month, in which he noted that asset classes like gold and cryptocurrencies don’t react as directly to rising interest rates as bonds.
“Blockchain is not a money flow oriented thing. It’s like gold. It can work very differently than interest-oriented products. I think, when I think about it, as interest rates rise, blockchain will be the relatively most attractive asset for investors.”
Morehead acknowledged that while the crypto market appears to have reacted to the Fed’s late moves, the digital asset’s value proposition remains unchanged. The current drop in market prices is also likely to be due to the end of the US tax year.
“Part of the pressure to sell crypto is unintended tax positions. Active traders are still buying and selling BTC, ETH, XRP, etc. in a great year where the market hit many new milestones with amazing profits. $1.4 trillion in crypto profits were generated last year.”
However, he also noted that the market may have to go through many ups and downs before growing again.
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