Dan Morehead, who runs a crypto hedge fund named Pantera, blames the central bank for carrying out weak policies that have brought crypto to the ground. This article will discuss Morehead’s thoughts on the crypto bottom and the ideal investing strategy in the current market scenario.
Pantera’s Morehead questions the Central Bank’s policy
Dan Morehead launched a Bitcoin fund for his hedge fund, Pantera, back in 2013. The former Goldman Sachs Group bond trader started this crypto-based fund when wall street was ignoring the future of cryptocurrencies.
However, Morehead believes that the federal bank has been making monitory mistakes for too long, which is now affecting the crypto markets. With the latest onslaught of digital asset prices, multiple hedge funds are finding themselves in hot water.
Morehead states that digital assets have corrected due to the Fed raising rates to tackle inflation. The hedge fund manager says the Federal Reserve hadn’t increased overnight rates in more than a century. The Pantera manager also mentions that the Fed’s bond manipulation will continue to be destructive.
Speaking about this on his Twitter account, Morehead mentions these are the worst policy mistakes he has witnessed in over 35 years of investing. In a note, Morehead said the crashing of Terra and the capital hedge fund, Three Arrows Capital, as major meltdowns for the sector.
“There are probably a few more to come in the next month or two”, he wrote. Digital assets like Bitcoin have been trading similarly to the stocks in the current environment. Therefore, the recent correction can be attributed to the downward spiral of the global financial instruments after the rate hikes.
Morehead’s Current Investing Strategy
Pantera allocated a significant portion of its assets to Bitcoin in May. Since Morehead expects the crypto bottom to hit in the coming months, he is currently looking to invest in the safest digital assets. According to Morehead, buying Bitcoin will be a safe bet given the current uncertainty in cryptocurrencies.
“While we remain long-term bullish on many of these projects, during the crash, we have taken on a larger Bitcoin allocation to reduce downside risk”, he said.
While the hedge fund manager is not exactly sure when we will see the crypto bottom, he is confident that crypto will out-perform other financial instruments. “When the dust settles, I can see a world where everything with a discounted cash flow is down – and blockchain, commodities, oil, gold and other things that are truly not connected to rates are up a ton”, Morehead stated.