The US mortgage bond market is a Ponzi scheme, while digital assets could be a hedge when the bubble bursts, Dan Morehead asserted.
Dan Morehead – Chief Executive Officer of Pantera Capital – said the controversial monetary policies, which the US government enforced, could create bubbles in the financial system. In his view, bond markets “manipulated” by the Fed are the real Ponzi Schemes and not bitcoin.
The Danger Comes From The Fed; not Crypto
In a recent interview for Bloomberg, Dan Morehead – Founder and CEO of Pantera Capital – warned that investors dealing with bonds “are going to get absolutely destroyed when the Fed stops manipulating the bond market.”
Many critics of the cryptocurrency industry, such as the Nobel prize winner Paul Krugman and Richard Bernstein, have stated over the recent months that bitcoin is a Ponzi scheme (a fraudulent investment scam that generates returns for earlier investors by taking money from those who enter at a later stage).
Morehead strongly disagreed with that thesis. According to him, the American mortgage bond market is the real Ponzi scheme, while cryptocurrencies could be a hedge as bubbles in that sector begin to pop:
“Governments should stop obsessing about Bitcoin and look inward. 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.”
Dan Morehead, Source: Bloomberg
To double down on its efforts in the digital asset space, this summer, Morehead’s Pantera Capital – an investment firm focused on ventures and projects related to blockchain technology – raised $165 million through its cryptocurrency fund.
The Fed v. Bitcoin
The central bank of the USA – the Federal Reserve – is, by all means, a powerful institution that has the ability to affect the global financial network with its actions. Since the start of the COVID-19 pandemic, the Fed greenlighted the US Treasury Department to print trillions of dollars – a move that, according to many, would cause further monetary issues, including rapidly growing inflation.
In fact, several months later, the inflation rate in the States surpassed 6% for the first time in decades. A few days ago, Nayib Bukele – El Salvador’s President – urged the American authorities to stop printing such a vast amount of dollars out of thin air since the US national currency is broadly used in his country.
Apart from the greenback, though, the Latin American nation is known as the first where bitcoin is legal tender. Attempting to enhance its monetary status, the government made the legislation official this September.
Speaking of the primary cryptocurrency, it is considered an asset that could combat inflationary concerns. It has a finite amount of 21 million coins ever to exist, and many experts think it is the right financial instrument to hold during an economic crisis.
Dimitar got interested in cryptocurrencies back in 2018 amid the prolonged bear market. His biggest passion in the field is Bitcoin and he was fascinated with its journey. With a flair for producing high-quality content, he started covering the cryptocurrency space in late 2018. His hobby is football.
