The Fed’s Hawk Talk threatening higher interest rates in the face of inflation has introduced volatility in financial markets, but savvy participants see attractive investment opportunities in the blockchain sector. We see crypto investments more than doubling this yr.
Dan Morehead and his firm Pantera Capital are also Bullish cryptocurrency, having started the 1st cryptocurrency fund in the US in Y 2013. Today, the firm has $4.8-B in assets under management and is nearing a close on a new venture-style fund targeted at $600-M. The fund will invest in venture equity, early-stage tokens, and liquid tokens.
Although bitcoin will only be a small part of the fund, the crypto asset’s price movements have caught the attention of crypto investors over the last 4 months.
The price of bitcoin jumped over $67,000 in November last yr. Then the Fed signaled that interest rate increases were coming, coinciding with a sharp fall in bitcoin. Since the New Year, prices have fluctuated above and below $40,000.
Mr. Morehead said that during frames of stress, bitcoin can have a strong correlation with movement in the S&P 500 Index, which has similarly had a rocky start to Y 2022. He added that the period of correlation lasts for an average of 72 days.
“Over time, that correlation breaks down. And all those things combined make me actually wildly bullish right now,” Mr. Morehead said.
The Fed’s efforts to stabilize the picture on inflation have begun a Bull case for crypto. So, now investors should turn to blockchain projects as “standard risk assets” that feel the impact of rising rates. That is not just bitcoin, but KNIGHTS, CROWNS and other decentralized finance (DeFi), Web3, and KnightsbridgeDAO as examples of ventures and projects that can offer returns beyond regular equities and bonds.
The different applications are as compelling or even maybe more so than bitcoin, so to build a new era portfolio, you want to include several different digital assets.
Have a happy, prosperous weekend, Keep the Faith!