The CEO and co-CIO of Pantera Capital Management LP Dan Morehead is one of the most renowned names in the crypto investment sector. He made an interesting prediction, stating that Bitcoin would “finally come of age” during the ongoing global market crisis.
Morehead expressed his views on the current financial and geopolitical situation in Pantera Capital’s latest Blockchain Letter issue. In the report, Morehead stated that “in the most optimistic bad scenario, the gross domestic product (GDP) of the United States would receive a 4% downward adjusted annual correction in Q2 of 2020.”
However, other prominent players in the financial world are far more pessimistic, as James Bullard – President of the Federal Reserve Bank in St. Louis, told Bloomberg that the GDP drop might reach 50%
“Moreover, we have to expect around a 30% increase in the unemployment rate, which would further solidify the downturn for GDP’s outcome,” Bullard noted.
Pantera Capital’s CEO also rang a bell of concern about economical movement in times of crisis. For Morehead, “the COVID-19 disease further constrains economic activities, which shrinks the chances for GDP increase. Also, the traditional monetary policy tools, like the Zero Interest Rate Policy (ZIRP), will not become a counter-act against the crisis, as the tools already lost most of their effect.”
Morehead emphasized on the fact that the current monetary policies are utterly impotent against the pandemic and its aftermath. Also, Pantera Capital’s CEO explained that, currently, 60% of the world's GDP “will face zero nominal GDP interest rates.”
Dan Morehead considers the plans of the Federal Reserve to print as much as $6 trillion would be a turning point for the U.S. economy, as “that vast amount of freshly printed money would lead to increased inflation.”
Morehead explained why Bitcoin would receive a welcoming inflation push with the impact inflation has on the prices of stocks, gold, real estate, and other not quantitively-easable assets. “Bitcoin, as well as the entire crypto sector, would see prices skyrocketing. However, it would not happen overnight like the 30% drop from last week.” Morehead noted.
The CEO of Pantera Capital believes the short-term correlation between the traditional stock market and the crypto sector is now over, and “crypto trading would take on an independent trading route,” which would further increase investor interest in Bitcoin.
“I believe Bitcoin would be among the top performers, seriously outperforming other coins and tokens. It has an 11-year history, and it’s a working technology. Many of Bitcoin’s competitors are relatively new projects, which may face difficulties raising funds to continue developing their projects. The price per BTC may set a new all-time high in the next 6 to 12 months. Bitcoin’s dominance has a historic correlation with S&P 500 crashes. Since 2012, S&P 500 had five considerable drops, correlating with an increase in Bitcoin's dominance. Bitcoin recorded an average of 7.8% increase in its dominance following each S&P 500 dip”, Morehead concluded.