(Bloomberg) — Dan Morehead, the chief executive officer of Pantera Capital and longtime macroeconomic investor, sounded an alarm on what he called bubbles created by the Federal Reserve’s efforts and says digital assets should be bought instead.
Bond investors “are going to get absolutely destroyed when the Fed stops manipulating the bond market,” he said in a note on Tuesday. Morehead argued that Bitcoin and crypto assets could be a hedge as bubbles in debt markets begin to pop.
“Governments should stop obsessing about Bitcoin and look inward,” he said. “The biggest Ponzi scheme in history is the U.S. government and mortgage bond market – 33 trillion-with-a-T dollars – all being driven by one non-economic actor with a dominant position who is trading based on material, non-public information.”
Morehead, who was an executive at Julian Robertson’s Tiger Management earlier in his career, started Pantera’s first fund in 2013 to invest in cryptocurrencies. At the time, Bitcoin was trading at $65; the digital currency hit an all time high of nearly $69,000 in November. Morehead now invests in a wide array of digital assets and his firm has $6.4 billion in assets under management, according to its website.
He’s not the first to liken central bank policies to a Ponzi scheme. Guggenheim Investments’ Scott Minerd made a similar reference in early 2020, prior to the more recent actions taken by monetary authorities around the world to stem the financial wreckage brought on by the coronavirus pandemic.
As regulators sound alarms about cryptocurrencies, Morehead insisted that the depth and breadth of the Bitcoin market makes it impervious to being rigged.
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“The Bitcoin market is way too big to be manipulated,” he said. “Bitcoin trades on hundreds of exchanges in dozens of countries. Bitcoin’s daily volume is 1,000x as much as GameStop, which trades on just one market in just one country.”
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