Pantera Capital founder and CEO Dan Morehead says that cryptocurrencies may be the only safe asset class investors can turn to during the next economic downturn.
In a new interview on the Bankless YouTube channel, the executive reveals why he thinks crypto assets may end up being a lifeboat for investors facing chaos in the broader financial markets.
“I’m massively bullish on crypto right now and I think that the reason is because every two years, for the last 10 years, an order of magnitude more people come into crypto, so I think that steady flow of just smart people reading about it is coming.
But the other asset classes being destroyed think is going to sink in. Basically, there’s almost nowhere to hide. That’s why we call it the ‘great unwind.’ Everything except crypto I think is really going to be impacted.”
Morehead says that the crypto markets will prove to have a unique resiliency towards tightening monetary policy. Unlike bonds, real estate and equities, Morehead says crypto assets will likely be unfazed by rising interest rates, which most market participants are already anticipating.
“If we’re even partly right, bond yields are going to go to five percent or higher, obviously that crushes bond prices but it has to impact stocks and real estate and anything else that has a discounted cash flow.
So I think for a normal investor looking at the kind of normal asset classes…they’re going to just say ‘hey, if we have money to put to work, it’s hard to imagine putting it to work in any of these other things,’ and crypto should be completely disconnected from interest rates.”
The veteran crypto investor says that an asset like Bitcoin (BTC) should remain indifferent to changes in interest rates. He predicts that crypto markets start to come to grips with that reality and ultimately decouple from the stock market.
“There really isn’t any reason that a utility token like Bitcoin should really care if rates are zero, five, ten percent. I don’t see why it should matter so I do think they will decouple which is a story we’ve been all talking about for a decade. The reality is Bitcoin’s typically not correlated with everything else but it does get really correlated in these stress moments when the S&P comes off a big bunch.”
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Featured Image: Shutterstock/Urboshi/Natalia Siiatovskaia