Pantera Capital’s CEO Dan Morehead is not worried about the current crypto winter. He says that the industry has weathered similar bear markets before, and this one actually bodes well for the future of Bitcoin and blockchain.
“This is actually our second Crypto Winter,” Morehead mentioned on Laura Shin’s podcast called “Unconfirmed.”
“There was one in 2014 to 2015. In the previous one, I had more of a worry in the pit of my stomach about whether blockchain was actually going to work. There were real regulatory risks. “With this one, the underlying fundamentals are much, much stronger than they were in the 2014-2015 Crypto Winter.”
Pantera capital’s investment strategies are not affected by “distracting” daily Bitcoin price fluctuations, they’re based on five-to-ten year outlook, says Morehead.
“We are always trying to think [ahead] five to 10 years in our investing and looking at the positions that would do well over a long period of time. We’re not trying to get wrapped up in the cycles of the price action,” Morehead alleged.
Hourly crypto price changes do not worry Morehead, unlike many impatient investors who get major anxiety over the price fluctuations.
Morehead also believes that the market slump is deterring the institutional investors, but eventually, they’ll come.
Morehead said, “People have been talking for years about the impending institutional wave of money coming into the crypto market. I think we now have the required conditions for that to happen. Institutional investors really want to have a custodian that is well-known and regulated. We really haven’t had that in the past.”
ICE’s Bakkt and Fidelity making big moves into the crypto space, is going to attract institutional investors to crypto, says Morehead.
He says that institutional investors will start betting on Bitcoin once the price rises, as it’ll not be as risky. Big money pours in should be expected only after prices start escalating, as people and global institutions have a herd mentality and will follow once they feel the asset is worth investigating in as the prices escalate.
“The big wave of institutional money will probably not start until prices start going up. We saw that in the two previous cycles.”
“Crypto markets are even more extreme than the normal markets. The inflows into our Bitcoin fund have been massively pro-cyclical.”
“We launched the fund when Bitcoin was at $65. Very few investors came into until the price got to $400 or $500. And then, when the price rose to $1,000 in 2013, we had massive inflows. And when the Crypto Winter hit in 2014-2015, it really dried up.”
Morehead says it’s understandable that investors are not making moves waiting for conditions to improve in this prolonged bear market.
Regulatory uncertainty has been an issue with the crypto industry. When asked about it, Dan Morehead noted that the IRS and the CFTC have already issued statements. The major holdout right now is the Securities and Exchange Commission.
“The SEC is in the middle of figuring out what standards to set on what things should be securities and what won’t be,” he says. “In the next six to nine months that will be sorted out. Once it’s clear, it’ll be easier for exchanges and investors to know how to handle these types of assets. I think in the next 9 months, that will be sorted out.”