Investing in cryptocurrency is definitely a very popular choice that people these days are making. The entire market of cryptocurrency is a pretty volatile one. However, when it comes to trading and investments, there is an abundance of people who are willing to make investments into these digital currencies. But what could be the reason behind that popularity? Well, according to OMG crypto news today, the CEO of Pantera has his own explanation for the fact.
According to Dan Morehead who is the founder and CEO of Pantera Capital which is a pretty well-known fund for blockchain ventures, cryptocurrency tends to be the best location for storing or hiding the capital wealth of people during the interest rate hikes that keep on taking place. That is pretty much a good reason for investing in cryptocurrency since most people who want to escape the Fed rate hikes are investing in the currency for sure.
“I think when all’s said and done, investors will be given a choice: they have to invest in something, and if rates are rising, blockchain is going to be the most relatively attractive,” mentioned Dan Morehead.
The CEO and founder of foremost blockchain scheme fund Pantera Capital, Dan Morehead, specified that cryptocurrencies and digital assets will definitely be a great place for storing the wealth and capital away in case there is a fallout of the rate hikes of interest from the Federal Reserve of the United States of America
Investors that are across the entire stock as well as crypto markets are presently obsessed with the course the Fed might create to deal with the rising inflation which topped 7.5% as of this month.
Bitcoin and crypto markets have often moved in correlation to trends in the stock market, however, Morehead argued in his 16th February newsletter that bonds, stocks, and real estate will cop the brunt of the Fed‘s “massive policy U-turn,” in relation to hiking interest rates.
Despite the crypto market suffering a downturn since late 2021, the CEO suggested that digital assets will be the “best place” to store capital during the fallout of the Fed’s actions:
“I think our markets will decouple soon. Investors are going to think: bonds are going to get crushed as the Fed goes from the only buyer on Earth to a seller. Rising rates will make equities and real estate less attractive.”
“So, where does one invest when both stocks and bonds are falling? (Normally they are negatively correlated.) Blockchain is a very legit place to invest in that world,” he added.
To add to his point, Morehead also highlighted a previous statement he made during a conference call with investors earlier this month in which he pointed out that asset classes such as gold and crypto don’t directly correspond to interest rates as bonds do.
“Whereas blockchain isn’t a cashflow-oriented thing. It’s like gold. It can behave in a very different way from interest-rate-oriented products. I think when all’s said and done, investors will be given a choice: they have to invest in something, and if rates are rising, blockchain is going to be the most relatively attractive,” he said.
Morehead admitted that while the crypto market appears to have responded to the Fed’s movements of late, the value proposition of digital assets has remained the same, while the decreasing prices may also have been a result of the U.S. financial tax year coming to a close:
“Some of crypto selling pressure has been unintended tax positions. Imagine a trader actively buying and selling BTC, ETH, XRP, etc. Great year. Made a ton of money. Kept it all in the markets.”
“There were $1.4 trillion of cryptocurrency capital gains created last year. That could have caused a decent chunk of the recent sales,” he added. He did note, however, that there could be a lot and ups and downs before the crypto market goes on to surge again.