On Friday (March 18), crypto investment firm Pantera Capital CEO and Co-CIO Dan Morehead shared his thoughts on the crypto market.

Morehead’s comments were made while he was being interviewed by Matt Miller on Bloomberg TV.

With regard to the Bitcoin price, Morehead said:

Basically, Econ 101: supply and demand. Every two years, 10 times more people use cryptocurrency than they did in the past, and that’s been going on for a decade. Every two years, It’s 10 times more, and every two years, the price of crypto has gone up 10X, and to my mind, it’s that simple. Within the next five or 10 years, almost everyone with a smartphone will use cryptocurrencies, and if that’s true, they’re going to be at a much higher price.

Miller than asked Morehead if this means that Bitcoin could be trading around $400,000 (i.e. roughly 10X its price at the time of the interview) in 2025.

Morehead replied:

I think it actually will be some number like that. All the use cases that are really rolling out and people are using it. And now, institutional investors are really investing in the space from taking it, you know, like 10 or 20 basis points to maybe in 10 years 8% of their portfolio or something like that.

Miller than asked Morehead what will happen to the price of other cryptoassets.

The Panteral Capital CEO said:

Bitcoin has been amazing. We’ve owned a lot of it over the years, and I think it’s going go up another 10X over the next five years, or something like that, but most of the new innovations are in other things. There are hundreds of really interesting tokens out there, many of which are essentially companies built on top of Ethereum or Polkadot or Solana, and those are kind of the new small caps that have the potential to go up 100X, or some of these bigger numbers.

Dan Morehead and Joey Krug, who is Pantera Capital’s other Co-CIO, commented on the impact of higher interest rates on cryptoasset prices during a conference call with investors, and the highlights of their comments were published on February 16 as part of the February 2022 issue of the firm’s monthly newsletter (“Pantera Blockchain Letter”).

Krug said:

Our macro view here is that crypto definitely got hit by a lot of the news surrounding the interest rate hikes that the Fed is planning. But at this point, we think it’s mostly been priced in. As of today, the market’s pricing in about five rate hikes—and I think a lot of that is being overplayed in crypto. Ethereum went down to a low of about $2,200 or so, and if you look at the 10-year treasury, it peaked at about 1.9% and it’s kind of leveled off since then. Today it’s trending at about 1.8%. Now that things have gone through this really aggressive move, where late last year the 10 year was 1.35% and then went up to 1.9% quickly, I think that was sort of a wake-up call to the market.

But if you look at crypto specifically, when the traditional macro markets go down, crypto tends to be correlated with them for a period of roughly 70 days, so a bit over two months, and then it begins to break its correlation. And so we think over the next number of weeks, crypto is basically going to decouple from traditional markets and begin to trade on its own again.

There are a couple of reasons for that. One is that crypto is still a relatively small market and so things like the federal funds rate being at 1.25% versus 0% doesn’t make a huge, huge difference for something that’s growing four to five times year over year, especially if you look at stuff like DeFi, where it’s already trading at fairly cheap multiples. There are a lot of DeFi assets that trade from P/E multiples anywhere from 10 to 40. They’re not crazy high-valued; tech stocks are trading at multiples of 400 to 500x.

Our view is it’s going to decouple over the next number of weeks and crypto will sort of trade independently again. It’s my personal view that $2,200 ETH was likely the bottom.

And Morehead added:

Once people do have a little bit of time to think this through, they’re going to realize that if you look at all the different asset classes, blockchain is the best relative asset class in a rising rate environment. Most asset classes do have a direct algebraic impact from rising rates. Bonds, obviously, when rates go up, prices go down. I think bonds are going to get killed. Most other things like equities have cash flows that need to be discounted, which implies lower prices if yields are higher. That’s also true of real estate and most other types of assets.

Whereas blockchain isn’t a cashflow-oriented thing. It’s like gold. It can behave in a very different way from interest-rate-oriented products. I think when all’s said and done, investors will be given a choice: they have to invest in something, and if rates are rising, blockchain is going to be the most relatively attractive...

That doesn’t guarantee it won’t go down next week.  It doesn’t guarantee that it won’t go down a lot more next month, or whenever, but it just means the odds are really high that the markets are at an extreme and will bounce back relatively quickly… I think it’s like weeks or a couple of months until we’re rallying very strongly.  We are quite bullish on the market, and we think prices are at a relatively inexpensive place.


The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.