Pantera Capital Founder Predicts Surge for Crypto and Tangible Assets
Dan Morehead, the founder of Pantera Capital, anticipates a forthcoming adjustment in the equities markets and foresees a comparative surge in crypto assets.
Morehead expressed his viewpoint that the S&P500 is considerably overvalued and likely to undergo a 23% decline.
Managing assets totaling $4.2 billion at Pantera, Morehead anticipates that the Federal Reserve will probably continue raising interest rates due to escalating wage inflation and a series of labor strikes across the US.
He believes that the ongoing escalation in interest rates by the Fed will exert downward pressure on stocks, bonds, and real estate, suggesting that, at best, prices might remain stagnant for a considerable period.
Morehead suggests that a significant correction in the S&P 500 and an underperformance of equities are the more probable outcomes.
Additionally, he draws attention to the possibility of an extended period of stagnant prices, citing historical instances where stocks remained flat for roughly 13 years, as in the periods of Aug 2000 to Feb 2013 and Nov 1968 to Aug 1982.
In elaborating on different scenarios, he considers the potential for equities to revert to the average equity risk premium experienced in similar interest rate environments, which historically resulted in equities averaging +2.25% above bond yields. If equities were to readjust to this figure, it could mean a 43% decline.
Morehead provides his central forecast in a gold prediction. He speculates that while stocks and other high-risk assets might undergo a stagnant period, crypto and “real commodities” could potentially outperform during this phase.
He encourages a reconsideration of investment choices, highlighting the riskiness of bonds, the decline of real estate from its peak, and the overvaluation of equities. He points out that considering asset classes like real commodities and blockchain assets might be more prudent.