Dan Morehead, founder and CEO of prominent blockchain Panera Capital, has shared his confidence in the security of digital assets. Morehead stated that crypto is the “best place” to keep capital post the potential outcome of increased interest rates from the U.S. Federal Reserve. Rising inflation topped 7.5% this month, causing investors across both stock and crypto markets to pay close attention to the direction the Federal Reserve decides to take.
Crypto and Bitcoin markets often followed a similar trend to that of the stock market. However, according to Morehead’s prediction, bonds, stocks, and real estate will receive the brunt of the impact from the Federal Reserve in their attempt to combat rising interest rates. Morehead is confident that digital assets are the best location to hold capital during the Federal Reserve’s reaction, despite the downturn in the crypto market since 2021.
Morehead states, “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 seller. Rising rates will make equities and real estate less attractive.” He continues by saying, “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.”
Morehead recollected one of his previous statements during a conference call with investors, where he noted that bonds correspond to interest rates differently than asset classes like crypto and gold.
“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,” Morehead stated.
Morehead acknowledges that the crypto market has recently appeared to have been impacted by the Federal movement; however, the digital asset value proposition has remained the same. The close of the U.S. financial tax year may also be why prices are decreasing. Morehead states, “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.” He adds, “There were $1.4 trillion of cryptocurrency capital gains created last year. That could have caused a decent chunk of the recent sales.”
Morehead is aware, however, that the crypto market could experience many ups and downs before it surges again.