Bitcoin (BTC) is a “serial killer” correlated with traditional risk assets only “when the world freaks out,” and the crypto markets are about to “explode higher,” according to one of the most prominent investors in the crypto space.
The remarks were made by Dan Morehead, CEO and Co-founder of investment firm Pantera Capital, who spoke on Peter McCormack’s What Bitcoin Did podcast, published last Friday.
Morehead revealed his overall view of bitcoin as a new technology and a disruptor of old systems, calling it “a serial killer” that will disrupt not only one, but “dozens of different industries.”
“Some people call it digital gold, and yes, it’s awesome, it is digital gold, but you can keep registries of all kinds of other, non-financial assets on a blockchain. You can do so many different things with bitcoin and a blockchain, and that’s why I think it’s gonna rip through dozens of different markets,” the CEO said.
“The Internet changed everything, except for finance,” he said, adding that “What bitcoin is going to do is to bring the Internet to finance.”
Morehead reiterated his earlier forecast made in a conference call with investors on April 7 that he believes that the crypto markets “will really explode about 3 to 9 months from now.”
Investors will most likely start to focus on new opportunities a couple of months from now, as the focus moves away from the initial market panic, he explained.
“From all the cycles I’ve seen over 35 years, I have a very strong intuition that bitcoin will hit a record price within the next 12 months, and maybe, like, way higher than that,” the CEO said.
Meanwhile, speaking about the company’s current investment strategy, he admitted that the fund “took the risk down” temporarily when the scale of the COVID-19-related shutdowns became apparent, but claimed that they are now back at “full limit long” on cryptoassets, expecting higher prices in the months to come.
On the much-debated issue of whether bitcoin is correlated with the stock market, Morehead’s view is thus a bit less straightforward than some others who have made their voices heard in the past.
According to him, BTC correlates with the S&P 500 during panics, but the correlation is just temporary. On the contrary, bitcoin has “very low correlation over long periods of time,” the crypto investor explained, adding that “when the world freaks out, it is correlated.”
“There have been five big downdrafts in the S&P 500 since bitcoin was liquid to trade, and in each of those, bitcoin did become positively correlated with the S&P, and did drop with the S&P. However, that correlation breaks down after about eight weeks, and it then goes back to essentially zero correlation,” the CEO said.
As of January 31, Pantera managed USD 540 million in capital in seven funds in three product groups – passive, hedge, and venture. Their funds are open to accredited investors seeking to invest at least USD 100,000. The company has invested in crypto startups such as Abra, Bakkt, Bitstamp, Brave, Circle, Ripple, and others.