Beyond Bitcoin: Cryptocurrency Will Succeed Regardless of BTC, According to Pantera Hedge Fund
A crypto hedge fund manager is confident that his firm’s portfolio will succeed regardless of where bitcoin ends up. Dan Morehead, chief executive and co-investment officer of Pantera Capital, made his case by comparing the crypto market to the dot-com bull market.
In a letter to investors obtained by CNBC, Morehead said his struggling hedge fund will still turn a profit even if bitcoin goes the way of Pets.com, the high-flying dot-com startup that ultimately filed for bankruptcy in 2000.
“If you had a portfolio of IPOs — one was Pets.com and one was Amazon.com — it doesn’t matter what the rest were. You made a great return,” he said.
In Morehead’s view, even if bitcoin becomes Pets.com, the cryptocurrency revolution is here to stay. That means there will be other candidates that could become the Amazon of cryptocurrency.
The analogy was presented to investors in a letter that tried to explain Pantera’s disappointing returns as of later.
The Pantera Fund, which is comprised of 25 initial coin offerings (ICOs), fell 25% last year but is still up 200% since inception. Its Long-Term ICO Fund remains in positive territory while its Digital Asset Fund is down double digits. Pantera’s bitcoin fund has plunged 27% this year, but has gained 16,000% since it started.
Morehead Isn’t Saying Bitcoin Will Fail
It’s worth mentioning that Morehead never claimed bitcoin will fail, only that the crypto market is diverse enough to see other champions take the mantle should the original blockchain falter. In his letter he described bitcoin as the “miracle whip of financing,” advising investors to hold up to 2% of their portfolios in blockchain. His reasoning was thus:
“I am not certain that blockchain will return 20,000% again. However, the odds are high enough that when you sum the probabilistic weighted outcomes the expected value is the most asymmetric trade I’ve ever seen.”
His comments echo an article we ran last week where the author asserts that bitcoin ultimately has no bearing on the success of the digital currency market. That’s because cryptocurrency has a philosophical undercurrent that extends far beyond the original blockchain.
That being said, bitcoin enthusiasts will be happy to learn that the original blockchain isn’t going away anytime soon. As a matter of fact, bitcoin’s share of all cryptocurrency holdings has increased substantially since the start of the year when it accounted for a record low percentage of the total market cap.
Bitcoin plunged to six-week lows on Sunday with a price per coin of $7,310. At last check, it was trading at $8,143 for a market cap of $138.3 billion. The cryptorucrrency is down nearly 60% from last December’s highs of around $19,600.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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