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Dan Morehead, CEO of Pantera Capital has come forward to call out U.S. Federal Reserve for building a huge tragedy for the global cryptocurrency industry. He mentioned that Fed has created a self-inflicted disaster here.
Fed made two big mistakes
The digital asset market is trading under extreme bear conditions. As the downtrend continues, it slumped by another 3% over the last day. The total market cap now stands at around $871.5 billion.
According to Morehead, the crypto market has paid heavily for the two big mistakes done by the central bank. He mentioned that out of two only one has been slightly correct by the authority. However, the Fed seems to not acknowledge the big one.
Morehead highlighted that keeping overnight rates way too low and way too long has proven to affect the market in a big way. Meanwhile, the most disastrous mistake has been manipulating the bond market. He added that this is the first time in the last 95 years, that the central bank “never touched the interest rate past the overnight rate.”
Pantera Capital’s CEO suggests that this will be painful to unwind but Fed still doesn’t seem to realise what it has done. A reduction in their massive bond holdings is yet to be made.
BTC’s correlation with stocks increased
According to the release, Morehead further listed recent events in the crypto market that exposed the excess of leverage in the system. The collapse of Terra LUNA, CELSIUS, and 3AC made it to his tally. However, he hinted that there might be a few more to come in the next few months.
In increased selling pressure conditions, Bitcoin (BTC) outperforms the altcoins. The same has happened in this cycle also. Major of the tokens has fallen against BTC Since they touched their ATH.
Meanwhile, Bitcoin’s correlation with stocks has jumped sharply during the S&P 500 downdrafts. Usually, it takes 71 days for the correlation to come down but this spike has lasted longer. It is anticipated that it may come back down in the near future.
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