Dan Moorhead, CEO and founder of the leading blockchain fund Pantera Capital, said that digital assets would be the “best place” to store capital in the wake of a potential drop in US federal interest rates.
Investors in the stock and crypto markets are currently focused on how the Federal Reserve will handle rising inflation, which has reached 7.5% this month.
Bitcoin and cryptocurrency markets have often moved in line with stock market trends; However, Moorhead said in his Wednesday newsletter that bonds, stocks and real estate will handle the bulk of the Fed’s “enormous political turmoil” in connection with rate hikes.
Although the cryptocurrency market has been in a slump since late 2021, the CEO suggested that digital assets would be the “best place” to store capital during the fallout from the Fed’s actions:
I think our markets will be closed soon. Investors believe that bonds will collapse when the Fed turns from the sole buyer on earth to the seller. Higher interest rates will make stocks and real estate less attractive.”
“So where do you invest when stocks and bonds go down? (Usually negatively correlated.) Blockchain is a very legitimate place to invest in this world.”
To add to his point, Moorehead also highlighted an earlier statement he made during a conference call with investors earlier this month in which he noted that asset classes like gold and cryptocurrencies are not directly aligned with interest rates like bonds. .
“At the same time, blockchain is not a cash flow oriented thing. It is like gold. It can behave very differently from interest rate based products. I think when all is said and done, investors will have a choice: they have to invest in something, And if prices go up, the blockchain will be relatively more attractive, he said.
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Moorhead acknowledged that while the cryptocurrency market appears to have reacted to the Fed’s actions in the past, the value supply of digital assets has remained the same, and the price drop may also be a result of the approaching US fiscal year:
Some of the pressure on cryptocurrencies has resulted from unintended tax situations. Imagine that a trader is buying and selling BTC, ETH, XRP, etc. great year. He made a lot of money. Save everything on the market.”
“Last year, $1.4 trillion in capital gains were generated in cryptocurrencies. This may be the reason for a decent portion of the recent sales.”
However, he noted that there may be many ups and downs before the cryptocurrency market continues to rise again.