Dan Morehead, the CEO of the hedge fund Pantera Capital expects more meltdowns in the crypto sector. According to Morehead, continuous mistakes by the Federal Reserve have had repercussions that are seen in crypto, where more major meltdowns are possible.
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Bloomberg reports Morehead wrote a note saying that with its policy the US Central Bank is keeping interest rates too low and in manipulating the bond market it made crucial policy mistakes. Morehead added the mistakes are the worst in 35 years of his investing experience.
The Pantera CEO finds that the situation will be painful to correct. Also, he is of the opinion that the Fed doesn't seem to understand what they've done.
A lot of crypto companies found themselves in a crisis as the bear market started. Among them are the Terra ecosystem, crypto lender Celsius, hedge fund Three Arrows Capital, and others. Morehead believes that the collapse of major companies has helped to discover the leverage in the sector.
The entrepreneur said Terra's failure happened because it had an unsustainable economic/stabilization model, and Celsius has poor risk-management practices. As for 3AC, it had too much debt and couldn't meet margin calls.
Morehead refers to these events as major meltdowns. He predicts a few more to come in the following month or two. The Pantera CEO noted they remain bullish on many projects. During the crypto crash the company took on a larger Bitcoin allocation to mitigate risks. Morehead is optimistic about the future of blockchain and crypto saying when the dust settles cryptos, gold, bonds, real estate and other things will be up a ton.