How Pantera Capital Engineered a 10,000% Return Investing in Cryptocurrency

When it comes to bitcoin’s most ardent supporters, few can compare to Dan Morehead, the CEO and chief investment officer of the California-based Pantera Capital. Back in 2013, Morehead outlined a vision for what he believed was the greatest trade of a generation. Five years later, he is reporting back.

Eye-Popping Returns

Since its inception in 2013, Pantera Capital’s bitcoin fund has returned 10,136.15%, net of fees and expenses, Morehead reported Friday in a five-year anniversary post. Unsurprisingly, Morehead and fellow investment officer Joey Krug are still bullish on bitcoin. To that end, they shared two emails sent by the fund in 2013 to “share the original logic – as it is equally compelling today.”

At the time the emails were sent, bitcoin was trading at $104. It was morehead’s assertion that the cryptocurrency would spike to $5,000 because “bitcoin dominates cash, electronic fiat money, gold, bearer bonds, large stone discs, etc. It can do all of the things that each of those can. It’s the first global currency since gold. It’s the first borderless payment system ever.”

He added:

“In my opinion, it’s like deciding whether to buy Microsoft back in the day at $0.20 a share. It was hard to do when the stock was just at $0.10. In the fullness of time…clearly a great trade. I believe bitcoin right now is just like that. The world’s first global currency since gold and the world’s only borderless payments system (frictionless to boot) at a market cap of $3bn? Now that Silk Road is gone, a new wave of sophisticated investors are entering. It feels like it’s happening. A melt-up which could be orders of magnitude.”

Still a Great Time to Buy

Although Morehead incorrectly predicted bitcoin’s bottom back in May, he believes that the bear market can largely be attributed to institutions “buying the rumor and selling the fact” in anticipation of quality-regulated custodial services. In his view, bitcoin’s current price relative to its previous peak is one of the more compelling reasons to buy the cryptocurrency.

On a more fundamental level, Pantera believes cryptocurrency is the only viable method for achieving borderless payments. In the 2013 letter, Morehead described bitcoin as the first global medium of exchange since gold and the first borderless payment system ever.

Since its inception, Pantera has expanded beyond bitcoin to include companies, tokens and other blockchain-based projects. This includes launching a dedicated hedge fund to invest in blockchain companies.

At the time of writing, Pantera’s investment portfolio comprises 63 cryptocurrencies and ICO projects. In addition to bitcoin, the company has exposure to Ethereum, OmiseGo, Zcash, Ripple, ICON and Augur.

Diversification is key to ensuring Pantera picks the Amazon.com of cryptocurrency. In a March interview with CNBC, Morehead said it doesn’t matter how many failures you have insofar as you pick the one that will foster the global payment revolution. At the time, his fund’s lifetime return was 16,000%.

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.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi
Comments
  • “Diversification is key to ensuring Pantera picks the Amazon.com of cryptocurrency. In a March interview with CNBC, Morehead said it doesn’t matter how many failures you have insofar as you pick the one that will foster the global payment revolution.”

    Sam Altman, president of Y Combinator, made the right call by investing early in Stripe (2,000x)

    But 97% of his returns from 2010/2011 are from Stripe:

    “I only let myself think about this sort of thing on vacation, because if I acknowledged that I was wasting more than 90% of my time – which is true, from an economic perspective – I couldn’t get through my days”.

    One home run is all it takes… and you could be set for life

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