Benzinga - by Bibhu Pattnaik, Benzinga Staff Writer.
Last Friday, Dan Morehead, the chief executive of Pantera Capital, made a bold prediction that could send ripples through the investment community.
What Happened: Morehead said he foresees a potential crash in the stock market and suggested that cryptocurrencies may emerge as the superior investment compared to traditional assets like stocks, real estate and bonds.
Morehead, who manages a substantial portfolio at Pantera Capital, a firm with assets worth over $4.2 billion, expressed his concerns on social media.
In a post on X, he pointed to the S&P 500's inflated valuation, which he believes could see a significant correction of up to 23% due to the Federal Reserve's aggressive interest rate hikes, which were in response to wage inflation and the recent surge in labor strikes.
I believe the S&P 500 is massively over-valued and could fall 23%.According to Morehead, the persistent increase in interest rates is likely to exert a downward force on the value of stocks, bonds and real estate, potentially ushering in a prolonged period of stagnant growth.Two years ago, when Fed funds were zero and the 10-year was 1.34%, I predicted they would both go to at least 5.00%. We’re here. I think they’re going higher.
Wage inflation is double the Fed’s target. We… pic.twitter.com/bozyVlN6wF
— Dan Morehead (@dan_pantera) November 3, 2023
Also Read: Economist Says Stock Market Will Witness Largest Crash Since 1929 As U.S. Dollar Explodes
He referred to historical instances during which stock markets experienced extended phases of little to no growth that lasted around 13 years, and suggested similar scenario could occur soon.
However, Morehead said he does not rule out the possibility of an even more severe downturn, which could result in the stock market retracting by as much as 43% to align with historical equity risk premiums recorded during periods of high interest rates.
Contrasting his grim forecast for traditional investments, Morehead painted a more optimistic picture of cryptocurrencies and tangible commodities.
He argued that the blockchain asset class, currently valued in the trillions, presents a significant growth opportunity, especially considering most institutions have barely begun to invest in it.
According to him, institutions should consider increasing their investment in blockchain assets.
Now Read: US Banks Witness Whopping $100 Billion Deposit Drop In Just Three Weeks, Fed Survey Raises Alarm
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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