Dan Morehead, founder and managing partner of Pantera Capital, a digital assets investment hedge fund, has predicted an upcoming bull market for cryptocurrency. In Pantera’s latest letter, Morehead states that blockchain-related assets have started to decouple from market indexes and that the time is right for a new crypto rally.
Pantera’s Founder Dan Morehead: Blockchain Assets Should Trade ‘Independently’
Dan Morehead, founder and managing partner of Pantera, one of the first cryptocurrency and digital assets-focused hedge funds, has predicted an upcoming bull market for cryptocurrencies. Pantera’s latest blockchain letter titled “Bonds Down, Crypto Up” details the struggles that traditional market investors might face as the U.S. Federal Reserve is unable to keep “manipulating” the bonds market.
Morehead explained:
With the Fed no longer able to manipulate the U.S. treasury and mortgage bond market, bonds are experiencing a Wile E. Coyote moment.
Furthermore, Morehead states that investors should be wary of investing in “interest-rate sensitive asset classes.” This is where cryptocurrencies are poised to shine, as Morehead believes blockchain assets “should be able to trade independently of rising rates,” evading the impact of the coming announcement from the Fed.
Crypto Is Ready to Rally
Morehead’s analysis found that blockchain assets have decoupled from traditional markets, and have been as such for most of their market history. In Pantera’s letter, he states the correlation of blockchain assets with the S&P500 index over their first nine years of existence was 0.03, labeling them as the “dream investment” due to their “incredibly high historical returns and essentially no correlation with typical assets.”
However, Pantera’s founder details this degree of correlation did grow recently due to events which have affected the cryptocurrency ecosystem since last year. Morehead explained:
All of the excessively-leveraged centralized entities and the alleged criminal Sam Bankman-Fried in our space caused the correlation to spike up, peaking at 0.76 last year.
Morehead states that blockchain assets should be uncorrelated to stocks, bonds, and real estate, as they have no connection to interest rates, pointing out that the correlation between bitcoin and the S&P500 has returned to below 0.1.
These elements make Morehead predict a rise in the blockchain asset market as he believes sufficient time has passed since the events that propped this correlation up.
Morehead concluded:
I’ve learned there’s just so long markets can be down. Only so much pain investors can take. It’s been a full year since TerraLUNA/SBF/etc. It’s been enough time. We can rally now.
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