Shalini Nagarajan

Pantera CEO Dan Morehead is confident we&#8217;ve already seen the worst of bitcoin prices, as crypto markets regain their footing following months of downward trajectory.



In a 2023 market outlook blog published Monday, Morehead reasoned that digital assets and blockchain will thrive despite last year’s carnage. Pantera itself believes there’s no better time than now to start a company in the space. 



Morehead’s surety stems from Pantera managing blockchain funds through three previous crypto winters, each one with “supposedly catastrophic events,” he said. Pantera is a long-serving crypto hedge fund with $3.8 billion in assets under management.



“For example, when Mt. Gox went down, it represented 85% market share — much larger than FTX today.” 



Morehead then compared bitcoin’s 54% drawdown, from Jan. 1, 2022 to Jan. 17, 2023, to Tesla, Meta and PayPal stock — all tanked slightly more, around 60%.



“Blockchain’s resilience in the face of a terrible macro market for risk assets and historic idiosyncratic disasters is impressive,” he said. “I believe that it [bitcoin] has already bottomed and we will see blockchain assets continue their 13-year 2.3x per year appreciation trend soon.”



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/12532699/embed#?secret=5XxhwTNTwM" data-secret="5XxhwTNTwM" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">bitcoin has now outperformed Meta and Tesla stock but still tracking behind Amazon</figcaption></figure>



Meanwhile, the Menlo Park firm’s co-CIO Joey Krug <a href="https://panteracapital.com/blockchain-letter/the-year-ahead/#joey-section" target="_blank" rel="noreferrer noopener">described</a> 2022 as the “biggest year of upheaval in crypto history,” and drew parallels to the year 2014 when many projects went bust amid general belief that the industry would die. 



He wrote that despite lower prices, the industry is much better placed than it ever was.



Krug flagged Ethereum’s moves to scale and reduce transaction fees as fuel to be hopeful, and that further upgrades could see fees shrink to just a cent (currently <a href="https://bitinfocharts.com/comparison/ethereum-transactionfees.html#3y" target="_blank" rel="noreferrer noopener">around</a> $3.90 on mainnet and under $0.20 on layer-2s). 



He further noted that developing smart contract-based systems has become much easier and more efficient, giving breathing room for new developers.



<h3 class="wp-block-heading">Bitcoin bottom or not, DeFi could lead the next crypto cycle</h3>



The end state, according to Krug, is a scenario where more people will opt for decentralized finance (DeFi) protocols and apps:



“The average person will have apps on their phone that give them access to DeFi, where they’ll be able to engage in financial transactions without banks/brokers, with lower fees, global liquidity, and markets operating 24/7. The internet, but for finance.”



DeFi protocols are the best places to borrow or lend crypto, said Krug, especially given that centralized businesses have either folded or are in the process of winding down. 



But getting DeFi adoption to grow would require crossing two hurdles: Increasing liquidity within DeFi and making the space easier to use.



Krug believes more institutional capital needs to come into DeFi, along with more regulated asset custodians that support Ethereum. Another way is to aggregate liquidity across multiple chains, layer-2s and liquidity pools, he said.



Regarding usability, Krug thinks DeFi user experience isn’t yet good enough to enable mass adoption. He highlighted crypto wallet interfaces, transaction fees in ETH and fiat on-ramps unable to integrate natively within dApps as problems that must be addressed.



“The solutions to this current suite of problems will take another two to three years to be solved and built out. Many of them, and the future innovations they enable, will provide excellent investment opportunities,” he said.



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Bitcoin Has Bottomed, Will Soon Make Yearly Gains: Pantera CEO

Ben Strack

<div id="highlights-block_633452477e9c3" class="highlights">
 <ul>
 <li>Pantera Capital launched its first blockchain fund in June 2021</li>
 <li>The new fund will reportedly invest in equity, as well as digital tokens</li>
 </ul>
 
</div>



Pantera Capital is reportedly seeking to launch a second blockchain fund, despite the ongoing bear market that has sent crypto prices spiraling in recent months.&nbsp;



An institutional asset manager focused on the blockchain industry, Pantera currently offers five funds: venture, bitcoin, early-stage token, liquid-token and blockchain funds.



Pantera’s blockchain fund, which launched in June 2021, is an actively managed offering that invests in a combination of venture equity, early-stage tokens and liquid tokens. It is for qualified purchasers only and has a minimum investment of $1 million.&nbsp;



Now, Pantera founder Dan Morehead said Wednesday at a conference in Singapore that the company is planning to raise $1.25 billion for a second blockchain fund, <a href="https://www.bloomberg.com/news/articles/2022-09-28/pantera-capital-s-morehead-seeks-1-25-billion-for-blockchain-fund" target="_blank" rel="noreferrer noopener">Bloomberg reported</a>. The fund, which Morehead said Pantera aims to close in May, would invest in equity and digital tokens, he said.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I had the pleasure of being the opening keynote speaker at <a href="https://twitter.com/token2049?ref_src=twsrc%5Etfw">@token2049</a> Singapore. Such an incredible pool of talent here — home to thirteen <a href="https://twitter.com/PanteraCapital?ref_src=twsrc%5Etfw">@PanteraCapital</a> portfolio companies. <a href="https://t.co/YLjAIp3DOl">pic.twitter.com/YLjAIp3DOl</a>&mdash; Dan Morehead (@dan_pantera) <a href="https://twitter.com/dan_pantera/status/1575116239537549313?ref_src=twsrc%5Etfw">September 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A Pantera spokesperson did not immediately return a request for comment.&nbsp;



Though <a href="https://cms.blockworks.co/pantera-seeks-600m-for-new-blockchain-fund/" target="_blank" rel="noreferrer noopener">originally seeking to raise $600 million</a> for its first blockchain fund, Pantera executives said in March that it so far <a href="https://cms.blockworks.co/pantera-capitals-blockchain-fund-has-1b-in-commitments/" target="_blank" rel="noreferrer noopener">had $1 billion in commitments</a> and would close the vehicle to new investors the following month.



“We’ll really be diving into consumer [use cases] a lot more, the intersection of traditional finance and DeFi and also things around the continued global institutionalization of the space,” Pantera partner Paul Veradittakit said during a March investor call.&nbsp;



Veradittakit added at the time that the blockchain gaming sector would be “a huge sector for years to come,” and that the company would also be investing in NFT marketplaces, platforms and developer tools.



Over the last two months, Pantera has revealed investments in <a href="https://cms.blockworks.co/animoca-brands-among-backers-in-13m-raise-for-revolving-games/" target="_blank" rel="noreferrer noopener">Revolving Games</a>, Stacked, Pinata, Stride and Unstoppable Domains. Pantera <a href="https://cms.blockworks.co/unstoppable-domains-reaches-unicorn-status-after-latest-raise/" target="_blank" rel="noreferrer noopener">led the latter company’s $65 million Series A round</a> in July.



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Pantera Capital Reportedly Eyeing New $1.25B Blockchain Fund

<div id="highlights-block_6228d335c87d5" class="highlights">
 <ul>
 <li>Pantera partner calls gaming “a huge sector for years to come” in the crypto space</li>
 <li>The fund’s venture equity deals range from $1 million to about $40 million, typically as part of seed, Series A or Series B funding rounds</li>
 </ul>
 
</div>



Pantera Capital has $1 billion in commitments for its blockchain fund and will close the vehicle to new investors in April.



The blockchain-focused asset manager <a href="https://cms.blockworks.co/pantera-seeks-600m-for-new-blockchain-fund/" target="_blank" rel="noreferrer noopener">announced in May</a> that it was looking to raise $600 million for the fund. It is available only to qualified purchasers and has a minimum investment of $1 million.



“We’re going to invest twice as much in the market than we anticipated,” Pantera CEO Dan Morehead said during an investor call on Tuesday. “All of our peers are having strong fundraising cycles as well, so all that money will get put to work and drive the market up.”



Pantera will not make new investments in its three previously launched <a href="https://panteracapital.com/funds/venture-fund/" target="_blank" rel="noreferrer noopener">venture funds</a>, as future deals will feed into the new offering. About 40% of the Blockchain Fund’s assets will be allocated toward venture equity. Roughly 30% will go toward early-stage tokens, and another 30% will be allocated to liquid tokens.



“We’ll really be diving into consumer [use cases] a lot more, the intersection of traditional finance and DeFi and also things around the continued global institutionalization of the space,” Pantera partner Paul Veradittakit said on the call.



Investment sizes for the fund’s venture equity deals range from $1 million to about $40 million, typically as part of seed, Series A or Series B funding rounds. Pantera may take between 10% and 20% in the companies.&nbsp;



Early-stage token investments, which executives described as resembling venture equity deals, range from $1 million to $15 million, also in the earliest funding rounds.



“Our previous venture funds all started returning capital within three or four years and then a lot after five,” Morehead said. “I think this fund will be very similar to that.”



<h3 class="wp-block-heading">What does the fund hold?</h3>



Pantera Blockchain Fund has invested in 44 early-stage token projects and venture equity deals to date. The firm has led or co-led 26 deals and more will be announced in the coming months.



Executives highlighted the company’s investment in Aurora, a bridge designed to provide Ethereum compatibility and scalability for smart contracts on the NEAR blockchain that raised $12 million in October, as well as South Africa-based cryptocurrency exchange VALR which <a href="https://cms.blockworks.co/in-one-of-africas-largest-crypto-raises-south-african-exchange-takes-in-50m/" target="_blank" rel="noreferrer noopener">raised $50 million last week</a>. 



Pantera is also leaning into what executives noted are among the hottest crypto segments: blockchain gaming, NFTs and the metaverse. It invested in Web3 gaming infrastructure platform GuildFi’s $6 million seed funding round in November.&nbsp;



“The gaming sector is going to be a huge sector for years to come in this space,” Veradittakit noted. “It’s very practical, is pretty easy for people to use and simpler to understand than things like DeFi.”



Pantera is also seeking to invest in NFT (non-fungible token) marketplaces, platforms and developer tools to make it easier to build within the growing space.&nbsp;&nbsp;



“Where we see this market going with NFTs is not only representation of digital art, but also representation of video, music…and then of course into video game assets too,” Veradittakit said.



<h3 class="wp-block-heading">Where is the market headed?</h3>



Morehead reiterated previous comments that the crypto asset class is “the most asymmetric trade” he’s ever seen.



When asked about market cycles, the CEO said crypto investors selling ahead of filing taxes has in part led to recent price dips.&nbsp;



Morehead previously predicted that bitcoin <a href="https://cms.blockworks.co/panteras-morehead-bitcoin-is-coming-of-age-on-track-to-hit-115000-this-year/" target="_blank" rel="noreferrer noopener">would hit $115,000</a> by August 2021. The asset’s price was about $42,200 at 10:30 am ET Wednesday, according to data compiled by Blockworks — up 9% from 24 hours ago. The executive noted that he expects prices to be “way higher” a year from now.



“There’s kind of a knee-jerk reaction to say it’s a bubble,” Morehead said. “You can’t have a bubble that almost nobody owns. Ninety percent of major institutions don’t have a real, direct position in blockchain yet.”



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Pantera Capital’s Blockchain Fund Has $1B in Commitments

Jacquelyn Melinek

<div id="highlights-block_61cde92477703" class="highlights">
 <ul>
 <li>On Dec. 26, Terra, with its ticker LUNA, hit an all-time high of $103.33 before retreating to current levels around $85.50 at the time of publication</li>
 <li>Morehead also predicts that blockchain platform Polkadot and a risk management marketplace for DeFi, Risk Harbor, will be hot tokens in 2022</li>
 </ul>
 
</div>



Pantera Capital CEO Dan Morehead sees Terra as one of the most promising alternative coins for 2022, he <a href="https://www.cnbc.com/video/2021/12/29/pantera-capital-ceo-says-he-sees-terra-as-the-most-promising-alt-coin.html" target="_blank" rel="noreferrer noopener">said</a> during &#8220;Crypto Night in America&#8221; on CNBC. 



“It’s growing at a very rapid rate,” Morehead said. “We think it’s one of the most promising coins for the coming year, so many people are just starting to discover it and just starting to trade it,” he added.&nbsp;



On Dec. 26, Terra, known by its ticker LUNA, hit an all-time high of $103.33 after retreating to current levels around $85.50 at the time of publication. The cryptocurrency is up 12,861% year-to-date from 66 cents, according to <a href="https://coinmarketcap.com/currencies/terra-luna/" target="_blank" rel="noreferrer noopener">data</a> from CoinMarketCap. Terra’s market capitalization is hovering around $31 billion, but “still has plenty of room to grow,” Morehead said. 



Morehead also predicts that blockchain platform Polkadot and a risk management marketplace for DeFi, Risk Harbor, will be hot tokens in 2022.&nbsp;



Founded in 2013, Pantera is a US institutional asset manager focused exclusively on blockchain. It currently offers a variety of funds, including one focused on bitcoin that provides passive exposure to the cryptocurrency and daily liquidity.



The company’s other offerings include a venture fund targeting companies building products and services in the blockchain ecosystem, a liquid token fund with exposure to publicly traded digital assets and an early-stage token fund investing in early-stage blockchain protocols. The firm also launched a Blockchain Fund in June, which blends the latter three strategies, Morehead said during a conference call in August, Blockworks previously <a href="https://cms.blockworks.co/inside-pantera-capitals-new-blockchain-fund/" target="_blank" rel="noreferrer noopener">reported</a>.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“[Terra] is beginning to gain traction in the South Korean gaming market and that’s one of the leading markets for gaming in the world and so it’s starting to broaden out from stablecoins to much more interesting things,” he said.</blockquote>



According to <a href="https://allcorrectgames.com/insights/mobile-game-market-index/south-korea/" target="_blank" rel="noreferrer noopener">data</a> from Newzoo, the total South Korean gaming market was $7.325 billion in 2020, which made it the fourth-largest gaming market in the world.



While the altcoin market has seen explosive growth during 2021, with year-to-date increases as high as <a href="https://coinmarketcap.com/currencies/gala/" target="_blank" rel="noreferrer noopener">45,451%</a>, investors are venturing away from traditional cryptocurrencies and into new ones.  



“There was a time when just holding Bitcoin and Ethereum was kind of a good proxy for the industry as a whole,” Morehead said. But with 80 different tokens now in Pantera’s portfolio, Morehead notes, “if someone is going to be converting from something into new things they’re probably selling Bitcoin and Ethereum.”



<hr class="wp-block-separator">
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<hr class="wp-block-separator">

Pantera Capital CEO: Terra is ‘One of the Most Promising Coins for the Coming Year’

Casey Wagner

<div id="highlights-block_615dfc1aa2f2c" class="highlights">
 <ul>
 <li>Dan Morehead says the days of vast price swings may be a thing of the past </li>
 <li>Historically, bitcoin has seen two bear markets where the currency lost 83%, but the most recent two have been -61% and -54%, respectively</li>
 </ul>
 
</div>



Just in time for bitcoin’s latest rally, Pantera Capital has released its investment letter and the firm is as optimistic as ever. 



“My sense is that we finished the halving cycle in April,” Morehead wrote in Pantera’s October <a href="https://panteracapital.com/blockchain-letter/the-next-price-era/" target="_blank" rel="noreferrer noopener">blockchain letter</a>. “We had a period of temporary insanity — where Chinese mining bans were thought to be negative and a few people had blockchain ESG upside down — and now we’re in a new bull market.”



Pantera, which earlier this year set its bitcoin price target to hit $115,000 by August 2021, has long looked to bitcoin halving cycles as a timeline for price movements. The world’s largest cryptocurrency typically sinks about 15 months prior to halving, which occurs every 210,000 blocks, before rising and rallying after the halving.&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="512" height="288" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg" alt="Pantera chart" class="wp-image-9023" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Pantera-chart.jpg?w=80 80w" sizes="auto, (max-width: 512px) 100vw, 512px" /></figure></div>



The most recent halving was in May 2020, but the rally peaked early in April 2021 when bitcoin broke $64,000. Looking to halvings, Morehead said, is important when trying to understand the change in the stock-to-flow ratio across each halving.&nbsp;



The first halving reduced the supply of new bitcoins by 15% of the total outstanding bitcoins, he said, resulting in a major impact on new supply and pricing. The 2020 halving, by contrast, had less than a third of the impact on price.&nbsp;



“Each subsequent halving’s impact on price will likely taper off in importance as the ratio of reduction in the supply of new bitcoins from previous halvings to the next decreases,” Morehead wrote. “Below is a chart depicting past halvings’ supply reductions as a percentage of the outstanding bitcoin at the time of the halving.”



All this means, Morehead said, that the wildly volatile price swings bitcoin has been known for will likely start to calm.&nbsp;



“I long advocated that as the market becomes broader, more valuable, and more institutional the amplitude of price swings will moderate,” he wrote.&nbsp;



Historically, bitcoin has seen two bear markets where the currency lost 83%, but the most recent two have been -61% and -54%, respectively. This also of course means that bitcoin’s bull markets will not see such dramatic swings either.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Unfortunately, there’s no free lunch,” Morehead said. “The flipside is we probably won’t see any more of the 100x-in-a-year rallies either.”</blockquote>



Even without a 100% increase, there is still room left in this rally, Morehead said, but to be clear he is still bullish.&nbsp;



“If it ever hits -83% again, I’m going ALL IN,” he wrote.&nbsp;



Pantera did not provide an updated price target in this letter.&nbsp;

Pantera Capital’s Morehead: We Are in a New Bull Cycle

<div id="highlights-block_61435b111102e" class="highlights">
 <ul>
 <li>Pantera CEO Dan Morehead noted that while bitcoin’s market cap could grow by 10 times in half a decade, he expects other crypto segments to go up even more</li>
 <li>Executives counter argument of Bridgewater Associates CIO Ray Dalio that governments will “kill” bitcoin if it becomes successful </li>
 </ul>
 
</div>



The cryptocurrency market capitalization could continue to roughly double in size each year over the next half decade to reach $40 trillion by that time, <a href="http://v" target="_blank" rel="noreferrer noopener">Pantera Capital</a> CEO Dan Morehead said during a panel at Blockworks’ Digital Asset Summit (DAS) on Wednesday.



While he noted that bitcoin could grow by 10 times during that span, he expects other crypto segments to go up even more. More than 100% of the returns in the cryptocurrency industry have come outside of bitcoin over the last six months, Morehead added.



“Money protection or a digital gold is one of the things blockchain does, but there’s hundreds and hundreds of different use cases — NFTs, DeFi, all that and that’s why it’s so exciting,” he said. “It’s going to go through so many different industries and end up being worth so much value because it’s disrupting things that weren’t touched. Basically all of finance wasn’t touched by the internet.”



The global cryptocurrency market cap today is $2.28 trillion, according to <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">CoinGecko</a>, as cryptocurrency trading volume in the last day was at $144 billion, as of 12:30 p.m. eastern on Thursday. The market caps of bitcoin and Ethereum were at about $900 billion (39.8% of overall market) and $425 billion (18.7%), respectively, the data shows.



Morehead was joined on the Manhattan event stage by Mark Yusko, founder and CIO of <a href="https://www.morgancreekcap.com" target="_blank" rel="noreferrer noopener">Morgan Creek Capital Management</a>, and Dan Tapiero, founder and CEO of <a href="https://10tfund.com" target="_blank" rel="noreferrer noopener">10T Holdings</a>.&nbsp;



Yusko, who estimates a $25 trillion crypto market in five years, said he expects a burst in the crypto market value over the next 24 months, followed by a bust.&nbsp;



“People will [say] it’s over, it’s the end,” he told the crowd. That’s the beginning.”



Yusko noted that he also expects the dominance of bitcoin to decline to about 20% of the overall crypto space, perhaps reaching $5 trillion by 2026.



Meanwhile Tapiero estimated that the crypto market value could hit $20 trillion and said bitcoin reaching a price of $500,000 is “very reasonable” within five years.



Bitcoin’s price was above $48,000 on Thursday afternoon, according to CoinGecko, up 4.3% in the last seven days.&nbsp;&nbsp;&nbsp;



“I don’t know that bitcoin dominance will fall … because there is a world in which things start getting built on bitcoin,” Tapiero explained. “There’s so much innovation happening at such a fast pace that, at least for me, I find it hard to be specific on the bet.” 



<h3 class="wp-block-heading">Can crypto be stopped?</h3>



Ray Dalio, CIO of hedge fund manager Bridgewater Associates since 1985, said Wednesday in an <a href="https://twitter.com/SquawkCNBC/status/1438122407965954054?s=19" target="_blank" rel="noreferrer noopener">interview</a> with CNBC that though he has a small allocation to bitcoin relative to other investments, the growth of crypto could lead to its end.&nbsp;



“It’s an amazing accomplishment to have brought it from where that programming occurred to where it is,” he said. “&#8230;I think at the end of the day if it’s really successful, they’ll kill it. They’ll try to kill it and I think they will kill it, because they have ways of killing it.



“It doesn’t have intrinsic value,” Dalio added. “If you put cryptocurrencies, or let’s say bitcoin, in the historical perspective, there are so many things in a historical perspective that didn’t have intrinsic value and had perceived value and then became hot, and then became cold.”



Taperio called Dalio’s comments “ridiculous” during the DAS panel, noting that older investors who are choosing to ignore the benefits of crypto are having their wealth devalued.&nbsp;



Yusko called bitcoin the “greatest money ever invented,” noting that it and gold are the only two forms of actual money.



“That money … will displace all of the bad, crappy money, and that is inevitable and there’s no way to stop it,” Yusko said. “Ray Dalio is crazy to say they can shut it down. No, you can’t.”



The Morgan Creek founder noted China’s first crackdown on bitcoin in 2013, which sent its price tumbling.&nbsp;



“The price fell from $1,400 to $1,000 in two weeks,” Yusko noted. “Where is it today? Is it higher than $1,000? Last time I checked it was, right?’



<hr class="wp-block-separator"/>



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DAS 2021: Crypto Market Could Hit $40T in Five Years

<div id="highlights-block_613a38f066ad9" class="highlights">
 <ul>
 <li>Pantera Capital announced a new $600 million blockchain fund that has already raised $375 million </li>
 <li>The fund’s minimum investment is $1 million, limiting it to institutional investors</li>
 </ul>
 
</div>



Venture capital money is pouring into the digital asset space at a record pace this year, with $3 billion allocated to the space in the first quarter of 2021 alone, according to data from <a href="https://pitchbook.com/news/articles/crypto-startups-post-record-quarter-as-opportunities-abound" target="_blank" rel="noreferrer noopener">Pitchbook</a>. 



Cryptocurrency investment manager Pantera Capital is launching a new blockchain fund and it is already more than halfway to its goal of $600 million.&nbsp;



Pantera CEO Dan Morehead announced the fund, which will have closings every fiscal quarter, on a call with investors Wednesday. The first closing for the fund was completed in June with $375 million raised.&nbsp;



The fund will invest in three categories; venture equity, early stage tokens and traded liquidity tokens, such as bitcoin. The largest allocation will be toward venture equity. It is designed to protect against short-term volatility that can be nerve wracking for investors.&nbsp;



“The new fund is able to capture the often-large swings in value between equity and tokens,” Dan Morehead, CEO and co-chief investment officer of Pantera, wrote in a letter to investors. “Tokens reset quickly. In May, tokens dropped 55% in the span of a few weeks. On the other end of the spectrum, venture equity is very slow moving.”&nbsp;



The venture capital structure is a 10-year commitment, which helps investors to overlook day-to-day fluctuations in the market, Pantera said.&nbsp;



Pantera, which manages $5 billion in assets, began investing in the digital asset space in 2013, when convincing institutional investors to enter the digital asset space was a challenge.&nbsp;&nbsp;



“Our first institutional, or outside LP, venture fund was in 2014, and it was a slog,” said Paul Veradittakit, partner at Pantera. “It was so tough to fundraise, we raised about $25 million for that one, mostly from high net worth individuals and family offices, and it was just venture.”&nbsp;



Things have changed since then, and it’s mostly due to institutional investor interest, Verdittakit said, which really picked up earlier this year.&nbsp;



“Because of what was happening last year with DeFi, investors really opened up to the possibility of getting exposure to tokens,” he said. “A lot of investors think that it makes sense to have exposure to everything, and they want to defer to a fund manager versus trying to decide which strategy to deploy and when.”&nbsp;



Regulation, Verdittakit said, is a common concern for investors, given the current lack of clarity in the space, but further oversight is an indication that the industry is growing.



“I think there&#8217;s been a lot of regulatory progress, both in terms of custody and in terms of licensing, there&#8217;s obviously some potential concerns around DeFi, but I think it probably doesn&#8217;t get regulated, up to a certain extent, unless the space gets large enough,” he said. “If space gets large enough, then the project will have matured and it&#8217;s a good problem to have. We&#8217;ll see what happens but we&#8217;re obviously going to do whatever we can as a firm to push forward regulations.”&nbsp;



Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

As Crypto VC Funding Hits Record High, Pantera Launched $600M Fund

<div id="highlights-block_6112eb18713e6" class="highlights">
 <ul>
 <li>Forty percent of the fund invests in venture equity, while remaining 60% split between early-stage and liquid tokens</li>
 <li>CEO Dan Morehead says bitcoin could hit $700,000 one day if everyone with a smartphone begins using it</li>
 </ul>
 
</div>



<a href="https://panteracapital.com">Pantera Capital</a> plans to continue raising capital until March 2022 for its Blockchain Fund, which blends several of its existing strategies into one wrapper in an effort to give investors exposure to the entire blockchain assets spectrum. 



Founded in 2013, Pantera is a US institutional asset manager focused exclusively on blockchain. It currently offers <a href="https://panteracapital.com/funds/bitcoin-fund/">a bitcoin fund</a> that offers passive exposure to the cryptocurrency and daily liquidity; <a href="https://panteracapital.com/funds/venture-fund/">a venture fund</a> targeting companies building products and services in the blockchain ecosystem; <a href="https://panteracapital.com/funds/liquid-token-fund/">a liquid token fund</a> with exposure to publicly traded digital assets; and an <a href="https://panteracapital.com/funds/early-stage-token-fund/">early-stage token fund</a> investing in early-stage blockchain protocols.



The firm’s Blockchain Fund, which launched in June, blends the latter three strategies, Pantera CEO Dan Morehead said during a conference call on Tuesday.&nbsp;



“We can flow with the pendulum that swings back and forth between value,” he explained. “Sometimes tokens are really cheap relative to venture and sometimes venture is cheap relative to tokens.”



<h3 class="wp-block-heading">A deeper look at the fund</h3>



Pantera had <a href="https://cms.blockworks.co/pantera-seeks-600m-for-new-blockchain-fund/" target="_blank" rel="noreferrer noopener">announced in May</a> that it was looking to raise $600 million for the fund, and Morehead said Tuesday that it plans on raising those funds until March 2022.



The fund will look to invest in decentralized finance, or DeFi, amid a surge of innovative custom financial products using the blockchain, Pantera co-CIO Joey Krug explained.&nbsp;



The capital within DeFi grew from about $1 billion in January 2020 to more than $115 billion, as of this month, Krug said. Trading volume on decentralized exchanges increased from about $1 billion to $56 billion over the same span.



About 40% of the fund’s assets will be allocated toward venture equity, the CEO noted, while roughly 30% will go toward early-stage tokens, and another 30% will be allocated to liquid tokens.



“We want to continue to focus on the early stage but be able to opportunistically invest into some Series B deals,” Paul Veradittakit, a partner at Pantera, said during the conference call. “&#8230;We’ll probably see a bit more on the consumer [side] and a bit more in terms of investing into other types of infrastructure in other geographies.”



The firm had led <a href="https://www.alchemytech.io/index.html" target="_blank" rel="noreferrer noopener">Alchemy</a>’s Series A funding in 2019 and looks to continue investing in the provider of blockchain infrastructure and developer tools.&nbsp;



On the consumer side, Veradittakit labeled <a href="https://www.bakkt.com" target="_blank" rel="noreferrer noopener">Bakkt</a> as another exciting investment.&nbsp;



“We do think that there’s going to be tokenization of not only what we see today but potentially other real-world assets like synthetic stocks or airline miles&#8230;and Bakkt is creating that digital wallet that allows any sort of tokenized asset to be accessible and tradable,” he explained.



Other consumer use cases Pantera is focused on are NFT investments, Veradittakit added, such as <a href="https://makersplace.com" target="_blank" rel="noreferrer noopener">MakersPlace</a>, a rare digital art market.



The Blockchain Fund’s early-stage token strategy includes investing in teams building new protocols in the blockchain ecosystem and follows an early-stage, venture-style model.&nbsp;



Pantera’s investments in this realm will be split between the new fund and the Early-Stage Token Fund, which launched in 2017 and provides investors with exposure to tokens with liquidity horizons of about one to three years. That offering has returned 209% in 2021, as of Aug. 8, Pantera reported.



In terms of liquid tokens, Pantera executives noted that though the firm believes in the value of bitcoin and Ethereum, non-bitcoin and Ethereum assets are likely to outperform in the short- to medium-term.



“Most of the fund is in non-bitcoin and Ethereum for that higher upside slash alpha,” Veradittakit explained.



Pantera’s Liquid Token Fund, which also launched in 2017, has posted year-to-date returns of 261%, according to the firm.



<h3 class="wp-block-heading">Bullish on bitcoin, blockchain</h3>



Morehead said on the call that throughout his career he has looked for asymmetric trades &#8211; ones in which the upside outweighs the downside.&nbsp;&nbsp;



“Bitcoin and blockchain is the most asymmetric trade I’ve ever seen,” he noted. “It is disrupting dozens and dozens of different markets.”



Bitcoin has had a 233% compound annual growth rate and has “zero correlation” to other parts of the market, the CEO added.&nbsp;&nbsp;&nbsp;



<a href="https://cms.blockworks.co/panteras-morehead-bitcoin-is-coming-of-age-on-track-to-hit-115000-this-year/">Morehead said in March</a> that bitcoin was on track to $115,000 by August 2021. As of 5 p.m. Eastern on Aug. 10, the cryptocurrency was trading just under $46,000.



Still, Morehead pointed to data showing that the price of bitcoin rises $200 for every million new users. If that stays constant and the 3.5 billion people with a smartphone all begin using the cryptocurrency, he explained, its <a href="https://cms.blockworks.co/pantera-stays-bullish-on-bitcoin/" target="_blank" rel="noreferrer noopener">price</a> could one day reach $700,000.



“I don’t know that bitcoin’s going to keep going up a ton, but I just think the weighted odds, when you look at how much it could go up versus how much it could go down, is an incredible expected return payoff,” Morehead said. “I wouldn’t suggest someone put their entire net worth into it, but you could put a few percent into it.”



Want more investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a>&nbsp;September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

Inside Pantera Capital’s New Blockchain Fund

<div id="highlights-block_60ca64ded0c46" class="highlights">
 <ul>
 <li>Bitcoin has only been this ‘cheap’ relative to its trend 20.3% of the past 11 years, according to Pantera Capital CEO Dan Morehead</li>
 <li>“Bitcoin’s still well below its ten-year compound annual growth trend. It’s not like we’re in overpriced territory or it’s a bubble,” he said.</li>
 </ul>
 
</div>



Based on the idea that human nature is pro-cyclical, market participants should “go against the urge” to sell and instead buy bitcoin while the market is below trend, said Dan Morehead, Pantera Capital CEO and co-chief investment officer.&nbsp;



Pantera Capital’s Bitcoin Fund has <a href="https://panteracapital.com/funds/liquid-token-fund/" target="_blank" rel="noreferrer noopener">returned over 79,400% in seven years</a> and has returned billions of dollars to its investors. Pantera currently manages over $4.8 billion in capital.



“Resist the urge to close down positions. If you have the emotional and financial resources, go the other way,” he said in his <a href="https://panteracapital.com/blockchain-letter/human-nature-is-pro-cyclical/" target="_blank" rel="noreferrer noopener">June investor letter</a>. 



The reason why? Well, “bitcoin has only been this ‘cheap’ relative to its trend 20.3% of the past 11 years,” Morehead said in a tweet.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">For new investors, it’s best to buy when the market is well below trend. Now is one of those times.<a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> has only been this “cheap” relative to its trend 20.3% of the past 11 years. More perspectives on market timing in our June investor letter: <a href="https://t.co/AOvhFyxBJh">https://t.co/AOvhFyxBJh</a> <a href="https://t.co/2bsxbw5Iay">pic.twitter.com/2bsxbw5Iay</a>&mdash; Dan Morehead (@dan_pantera) <a href="https://twitter.com/dan_pantera/status/1405237122659799044?ref_src=twsrc%5Etfw">June 16, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Although a recent peak went over trend value for 2021, in general, bitcoin is “far under trend valuation” and currently is trading 35% below its 11-year exponential trend, he said.&nbsp;



And in times like these, it’s best for new investors to buy when the market is below trend, according to Morehead. 



Trends are just starting, Morehead said&nbsp;



In the latest letter to investors, he said a convergence of elements has caused the blockchain markets to drop sharply but “the volatility has presented a very compelling opportunity.”&nbsp;



Elements like <a href="https://cms.blockworks.co/china-expands-2017-crypto-ban-to-include-defi-savings-accounts/" target="_blank" rel="noreferrer noopener">China’s ban</a> on cryptocurrency (for a third time), <a href="https://cms.blockworks.co/crypto-crash-when-musk-the-environment-tax-day-and-china-collide/" target="_blank" rel="noreferrer noopener">Tax Day</a> and Elon Musk’s tweets have factored into the recent market drops, he said. 



“When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” Musk said in a <a href="https://twitter.com/elonmusk/status/1404132183254523905" target="_blank" rel="noreferrer noopener">tweet</a> on June 13. 



Tax Day can have a significant impact on crypto prices as some people buy as much bitcoin they can, only to find out they owe some of their gains in taxes so prices fall leading up to Tax Day as some people pay their tax bills with crypto, Morehead said.&nbsp;



“Bitcoin’s still well below its ten-year compound annual growth trend. It’s not like we’re in overpriced territory or it’s a bubble. All these major firms and the Wall Street wealth platforms have now allowed their clients to buy Bitcoin. Big corporations, many of whom are not called Tesla Motors or Elon Musk, are buying Bitcoin. Those trends are just starting and this is a multi-decade disruption. I think we have a long way to go here,” Morehead said in an interview with Bloomberg News. &nbsp;