Bears continue to dominate sentiment, with more downsides likely amid inflation and geopolitical concerns.
Dan Morehead says if interest rates rise, equities and real estate will become less attractive, leaving blockchain assets as the best store of value.
Pantera Capital CEO Dan Morehead has said that crypto remains the “best place” for investors looking to store their wealth if US Federal Reserve’s interest rate hikes take the shine off equities.
In a newsletter published Wednesday, the Pantera chief pointed to the concerns across the markets over the Fed’s potential direction as it begins to hike rates in the wake of runaway inflation.
Last week, data showed US consumer prices rose 7.5% year over year, with Fed’s minutes this week signaling interest rates are incoming. While the market might have priced in the March rate hike, just how aggressive the central bank will be, has most investors in spooked mode.
Higher rates make stocks and real estate ‘less attractive’
A dip in the stock market will likely see Bitcoin and other crypto assets head lower, as happened this week amid the Russia-Ukraine tension. Lockstep trading is something that has seen analysts and economists predict more pain for crypto if stocks begin to bleed.
But Morehead thinks digital assets will have it less rough if the negative scenario plays out. He believes the “markets will decouple soon,” leaving investors with the choice of what would be the best store of value.
“Rising rates will make equities and real estate less attractive. So, where does one invest when both stocks and bonds are falling?” he asked in the note cited by Cointelegraph.
In his view, blockchain [and digital assets such as Bitcoin] provide “a very legit place to invest.”
Crypto sold-off due to tax preps
Commenting on the selling pressure that has crypto markets nursing huge losses since late last year, the Pantera chief pointed to a possible sell-side effect related to investors looking at taxes.
He noted that some of the downward pressure comes from “unintended tax positions” that investors find themselves in after a bumper 2021.
“There were $1.4 trillion of cryptocurrency capital gains created last year,” he wrote, adding that this alone could be responsible for a significant chunk of the sell-off seen since last year’s peaks for Bitcoin and other crypto assets.
Bitcoin is currently trading near $40,400, about 5% down in the past 24 hours as crypto tracks losses in equity markets. The S&P 500 closed 2.12% lower on Thursday, while the Dow fell more than 600 points.