Plenty of people wish they had bought crypto early, when it was still little more than a curiosity.
Former Goldman Sachs Group Inc. bond trader Dan Morehead was among the few who did, launching his first crypto fund when a Bitcoin cost less than a bag of groceries.
“I was captivated,” Morehead, 56, said in an interview, calling it “the first macro trade that is truly global across all borders.”
As a result, the Pantera Bitcoin Fund has returned more than 65,000% since 2013, and his Pantera Capital Management, once a traditional hedge fund that wagered on macroeconomic trends, oversaw $5.6 billion of crypto assets at year-end. That’s on top of the $6 billion the firm has returned to investors.
There’s always a chance it’ll crash and burn. Bitcoin has tumbled 17% to start the year and traded for $38,600 as U.S. markets opened Friday in New York, well below its November peak of roughly $68,000—a drop fueled by expectations of rising global interest rates and aggressive moves by central banks to tame soaring inflation.
This is where Morehead’s worlds collide.
Morehead stood out during crypto’s adolescence because he immersed himself in it after a storied career in finance. He started trading bonds at Goldman in the 1980’s, and later worked for hedge fund legend Julian Robertson before launching Menlo Park, California-based Pantera in 2003.
Rising inflation—and how central banks respond to it—will be a big theme of 2022, said Morehead, who previously had wagered on the long-term decline in inflation and yields.
That trade “basically made my career,” he said, “and I think it’s come all the way to the end of that story.”
Morehead expects a reversal of that dynamic to drag on cryptocurrency prices, but it hasn’t dampened his enthusiasm for the underlying technology.
Pantera doesn’t just bet on Bitcoin. It’s venture-capital funds invest in firms supporting the crypto ecosystem, including exchanges such as FTX, Coinbase and Gemini, while the firm’s token funds are putting money to work in blockchain developers. Recently, Pantera has focused on decentralized finance, or de-fi, a movement seeking to supplant the old Wall Street ways of doing business.
“Bitcoin and blockchain are upending the financial world,” said Fortress Investment Group co-chief executive officer Pete Briger, who worked with Morehead at Goldman. “Dan is at the epicenter of all that.”