Pantera Capital CEO Dan Morehead made statements about the possibility of a rate hike next month. Morehead described it as a market misunderstanding that Bitcoin (BTC) and the majority of cryptocurrencies fell amid the Federal Reserve’s plan to raise interest rates to combat persistent inflation.
“In this case, I have a very strong belief that the markets have really misunderstood this and that the rise in interest rates (I think it was pretty clear that this will happen and will continue to happen) really isn’t all that bad for cryptocurrencies. And compared to other asset classes, that’s actually really great for blockchain prices.”
According to the head of the crypto-focused hedge fund, digital assets are unique from other assets in that they are not affected by rising rates.
“Bonds, frankly, fall in price when rates go up. I think the bonds will be killed. Many other things, such as stocks, have cash flows that must be discounted, which means lower prices if the returns are higher. This also applies to real estate and many other types of assets.
Blockchain is not a cash flow oriented thing. Golden. It can behave very differently from interest rate-driven products. I think when all is said and done, investors will be given a choice: They need to invest in something and if rates are rising, blockchain will be the most attractive.”
Morehead also says that the current correlation between traditional financial markets and crypto will not last. Referring to a chart of Bitcoin’s (BTC) historical trend over the past 11 years, he predicts the leading crypto asset will rebound.
“I think the markets will bounce back. I think we’re weeks or months away from meeting very strongly. We are quite optimistic on the market and we think the prices are in a relatively cheap place.”
According to Pantera, Bitcoin spent only 12.7% of its history below the trend.
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