Interest Rate Hike 'Great' for Bitcoin Price, Says Pantera Capital CEO – BeInCrypto

We use cookies to improve your experience.
Lost or forgotten your password? Please enter your email ddress. You will receive mail with link to set new password.
Pantera Capital CEO Dan Morehead said an increase in interest rates would not be “really that bad” for bitcoin.
That’s because the crypto market had “priced in about five rate hikes” already, he says.
The U.S. Federal Reserve is planning to raise interest rates to curb inflation, which hit 7.5% in January.
Receive a sweet treat from us — $20 worth of BTC plus a $600 bonus. Redeem now!
Pantera Capital CEO Dan Morehead said that an increase in interest rates would not be “really that bad” for bitcoin (BTC), a proxy for the crypto industry. Relative to other asset classes, the rate hike might “actually [be] great for blockchain prices,” he says.

The U.S. central bank, or Federal Reserve, is preparing to raise interest rates to curb inflation and has indicated that it may raise rates three times in 2022, perhaps beginning as early as March. Investors have been watching the Fed’s next steps, worried that any policy changes will cause a decline in cryptocurrency prices.

In a Feb 16 letter to investors, Morehead agreed with an assessment by Pantera co-chief investment officer Joey Krug that the market had “priced in about five rate hikes” already. Krug said while “crypto definitely got hit” by news of the Fed’s planned rate hikes, this was “being overplayed.”
Krug forecast that crypto markets will decouple from traditional markets “over the next number of weeks”. He said that when conventional macro markets decline, crypto tends to correlate with them for a period of around 70 days before it breaks away and starts to trade on its own. The CIO explained:
“Crypto is still a relatively small market and so things like the federal funds rate being at 1.25% versus 0% doesn’t make a huge, huge difference for something that’s growing four to five times year over year, especially if you look at stuff like DeFi, where it’s already trading at fairly cheap multiples.”
Krug asserts that ethereum (ETH) at $2,200 was “likely the bottom.” This may apply to the broader crypto market, which crashed on Jan 21, with more than $230 billion wiped off the total market capitalization. BTC slumped 7.1% to under $39,000 on the day. It tanked further to around $33,000 a few days later amid fears of a hike in interest rates.
Dan Morehead, the Pantera chief executive officer, said bitcoin as an asset class will flourish during periods of rising rates. He discussed scenarios involving different assets and how an increase in rates could impact them. Bond and stock prices will fall, he observed, as does real estate and other types of assets. Morehead said:
“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.”
He showed that the price of bitcoin is currently trading at 60% below its 11-year trend, meaning “the odds are really high that the markets are at an extreme and will bounce back relatively quickly.”
Morehead predicted what he called the U.S. “bond bubble,” which will pop soon, and drive many people into crypto. He also said some of the recent declines in digital asset prices may have resulted from investors selling their holdings to pay tax, due by April 15 in the U.S.
U.S. inflation rose to 7.5% year-on-year in January, its highest level in 40 years. The Fed says it’s planning to raise its benchmark interest rate to contain inflation. Rates have remained near zero since March 2020.
Jeffrey Gogo is a versatile financial journalist based in Harare, Zimbabwe. For more than 17 years, he has written extensively on local and global financial markets; economic and company news. A climate change enthusiast, Gogo's work has appeared in Zimbabwe's biggest daily The Herald, Thomson Reuters Foundation, and several online publications. Gogo first encountered bitcoin in 2014, and began covering cryptocurrency markets in 2017.
Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans!
Join Our Telegram
Stay tuned with daily newsletters that make reading the news simple and enjoyable App – Earn up to 14.5% p.a. on 40+ crypto & stablecoins DeFi Wallet – Manage 400+ tokens, earn interest, and more DeFi Wallet – Manage 400+ tokens, earn interest, and more