Dan Morehead, chief executive and founder of Pantera Capital, says that the high correlation between cryptocurrency prices and risk assets is already starting to break.
(Bloomberg) — Dan Morehead, chief executive and founder of Pantera Capital, says that the high correlation between cryptocurrency prices and risk assets is already starting to break.
Morehead said that for a decade, digital token prices did not correlate closely with risk assets such as stocks. But for much of the year, digital tokens and risk assets have been “highly correlated,” he says.
But the crypto hedge-fund manager said crypto’s performance does not necessarily have to align with risk assets.
“Most risk assets are interest rate based,” Morehead said on Bloomberg TV. “Crypto really is totally independent. It’s about all kinds of different use cases that have nothing to do with rates, so I could see a world where even if risk assets continue to struggle, blockchain does well.”
Prices for Bitcoin, the largest virtual currency by market value, have mirrored moves in US stocks this year. A 60-day correlation coefficient for Bitcoin and contracts on the S&P 500 hovered around 0.67 on Wednesday. (A coefficient of 1 means the assets are moving in lockstep, while minus-1 would show they’re moving in opposite directions.)
“There are glimmers of this decoupling,” Morehead said.
Morehead said last month that Pantera plans to raise $1.25 billion for its second blockchain fund to court institutional investors. Pantera aims to close the fund, which will invest in stocks and digital assets, by May 2023.
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