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Pantera CEO: Crypto is the “ideal place” to hold capital during a Fed rate hike

“I believe that after all is said and done, investors will be faced with a choice: they will have to invest in something, and if rates rise, blockchain will be the most attractive,” Dan Morehead stated.

Dan Morehead, the CEO and founder of renowned blockchain venture fund Pantera Capital, argued that digital assets will be the “ideal place” to store capital in the aftermath of the US Federal Reserve’s interest rate hikes.

Investors in the stock and cryptocurrency markets are particularly focused on the Fed’s strategy for combating increasing inflation, which has reached 7.5 percent this month.

Bitcoin and crypto markets have historically moved in lockstep with stock market patterns, but Morehead said in his Feb. 16 newsletter that bonds, equities, and real estate will bear the brunt of the Fed’s “huge policy U-turn” on interest rate hikes.

Despite the fact that the crypto market has been in decline since late 2021, the CEO believes that digital assets will be the “ideal place” to store capital once the Fed’s initiatives take effect:

 

“I believe our markets will soon decouple. Investors will believe that bonds will be crushed as the Fed transitions from being the world’s lone buyer to a seller. Rising interest rates will make stocks and real estate less appealing.”

“So, where do you put your money when both stocks and bonds are dropping in value?” (Normally, they have a negative relationship.) In that scenario, blockchain is a really legitimate area to invest,” he added.

 

To support his position, Morehead cited a similar statement he made earlier this month during a conference call with investors, in which he stated that asset classes like gold and cryptocurrency do not immediately equate to interest rates like bonds do.

“Blockchain, on the other hand, isn’t a cashflow-oriented technology.” It’s as though it’s made of gold. It has the potential to behave considerably differently from interest-rate-sensitive goods. When all is said and done, I believe investors will be faced with a decision: they must invest in something, and if rates rise, blockchain will be the most attractive option,” he said.

While the crypto market appears to have responded to the Fed’s recent moves, Morehead conceded that the value proposition of digital assets has remained unchanged, and that the falling prices could possibly be due to the end of the fiscal year in the United States:

“Unintended tax positions have contributed to some of the crypto selling pressure. Consider a trader who is actively buying and selling BTC, ETH, XRP, and other cryptocurrencies. This has been a fantastic year. I made a tonne of cash. “I kept everything in the markets.”

“Last year, there were $1.4 trillion in cryptocurrency capital gains.” That could account for a significant portion of the recent sales,” he noted.

He did warn, though, that the crypto market could see a lot of ups and downs before resuming its upward trend.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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