In 2016, Dan Morehead launched into a world tour to evangelise the gospel of Bitcoin. A former dealer at Goldman Sachs and Tiger Administration, Morehead had change into orange-pilled just some years earlier than, satisfied that Bitcoin would reshape the worldwide financial system. He believed within the forex so fervently that he got here out of semi-retirement to remake his hedge fund Pantera Capital into one of many world’s first Bitcoin funds.
The brand new operation, launched in 2013, obtained off to a roaring begin, with backing from two of Morehead’s fellow Princeton alumni, Pete Briger and Mike Novogratz, each from the non-public fairness large Fortress. The trio watched with glee because the Bitcoin bought by Pantera at an preliminary worth of $65 soared to over $1,000 by the top of the 12 months. However then, catastrophe struck as hackers cleaned out the fledgling crypto trade’s predominant alternate, Mt Gox, and the value of Bitcoin plummeted 85%. “Folks would say, ‘Didn’t you try this Bitcoin factor that died?’” Morehead recollects. “It’s nonetheless alive!” he would reply.
Throughout his 2016 journey to evangelize Bitcoin, Morehead took 170 conferences, every time going right into a potential investor’s workplace and spending an hour arguing why the brand new forex was probably the most compelling doable alternative. The end result: He managed to lift simply $1 million for his flailing fund. Even worse, Morehead’s personal charges totaled round $17,000. “I earned $100 a gathering, going on the market attempting to evangelize folks to purchase Bitcoins,” he tells Fortune.
Lower than a decade later, as Bitcoin pushes $120,000, Morehead’s brutal early slog feels just like the stuff of founder mythology— proper up there with the tales of Apple’s Steve Jobs and Steve Wozniak tinkering in Jobs’ mother and father’ storage, or Warren Buffett and Charlie Munger buying and selling inventory suggestions at an Omaha banquet.
Immediately, Pantera manages over $5 billion in belongings throughout totally different crypto funds. Its holdings comprise digital belongings comparable to Bitcoin and Ethereum, in addition to enterprise investments in initiatives comparable to Circle, which went public in June, and Bitstamp, which was acquired by Robinhood earlier this 12 months for $200 million. However what units the agency other than the crowded discipline of crypto VCs is its early-mover standing as a storied bridge between the buttoned-up world of conventional finance and the once-renegade crypto sector. On the middle is Morehead, an unsung determine in an trade dominated by larger-than-life characters.
“I’m very cussed, and I’m completely satisfied [Bitcoin] goes to alter the world,” Morehead tells Fortune. “So I simply saved going.”
The Princeton mafia
Again earlier than Wall Road infiltrated the blockchain trade, Morehead’s caught out within the chaotic world of early crypto. A two-sport athlete at Princeton in soccer and heavyweight crew, Morehead nonetheless has the broad shoulders and sq. jaw of his youth. The determine he reduce was a far cry from the wiry, iconoclastic sorts who spent most of their time on web message boards. Morehead, in distinction, got here from the standard world of finance. He’s nonetheless not often noticed with no blazer.
Morehead had already had an extended buying and selling profession earlier than studying about Bitcoin. After stints at Goldman Sachs and Tiger, he started his personal hedge fund, Pantera, which flamed out through the 2008 monetary disaster, proper across the time {that a} shadowy determine named Satoshi Nakamoto launched Bitcoin to the world in a web-based white paper.
Morehead first heard about Bitcoin in 2011 from his brother and was vaguely conscious {that a} classmate from Princeton, Gavin Andresen, was operating an internet site that gave out 5 Bitcoins to any consumer for fixing a captcha (present road worth: $575,000). However Morehead didn’t assume a lot about it till a few years later, when one other classmate, Briger, invited Morehead for espresso on the San Francisco workplace of Fortress to speak crypto, with Novogratz calling in. “Since then, I’ve been possessed by Bitcoin,” Morehead says.
Tech is known for its so-called “mafias”—clusters of staff from distinguished organizations like PayPal who go on to guide the subsequent era of startups. In crypto, it’s not an organization however a college, with Princeton liable for a number of the trade’s most influential initiatives. Briger and Novogratz each served as key backers of Pantera, with Morehead even shifting into empty workplace area at Fortress’s SF workplace. Briger stays a robust, albeit behind-the-scenes, presence in crypto, lately taking a seat on the board of administrators of Michael Saylor’s $100 billion Bitcoin holding agency, Technique. Novogratz went on to discovered Galaxy, one of many largest crypto conglomerates. And one other classmate, Joe Lubin, went on to change into one of many cofounders of Ethereum.
However again in 2013, it nonetheless appeared far-fetched that Ivy League graduates working within the rarified fields of personal fairness and macro buying and selling could be fascinated about Bitcoin. Briger tells Fortune that he first realized about it from Wences Casares, an Argentine entrepreneur and early crypto adopter, whereas sharing a room at a Younger Presidents’ Group gathering within the San Juan Islands. Briger shortly noticed the enchantment of upending the worldwide funds system—a degree he sticks by immediately, although he argues that Bitcoin remains to be in its infancy. He says that Bitcoin mirrors the promise of the web, which facilitated a brand new type of info movement. “The truth that cash motion doesn’t occur in the identical means is an actual disgrace,” he says.
After sharing the concept with Novogratz, they thought that Morehead, who had expertise working in overseas alternate markets, could be the best individual to deliver on. When Morehead determined to commit the remainder of his monetary profession to crypto, he rebranded Pantera as a Bitcoin fund and opened it again as much as exterior buyers. Briger and Novogratz each signed on as restricted companions, with Fortress and the enterprise corporations Benchmark and Ribbit taking basic associate stakes, although they’d later withdraw. His outdated mentor at Tiger, the legendary investor Julian Robertson, even backed a later fund.
Pantera’s rebirth
Within the hurley-burly early days of crypto, entrepreneurs needed to confront dramatic booms and busts that make immediately’s volatility appear like minor blips. However the wild worth roller-coaster wasn’t the most important headache, Novogratz recollects. It was merely attempting to acquire BTC within the first place.
He went to Coinbase, then only a 12 months outdated, to attempt to purchase 30,000 Bitcoins, which might have bought for round $2 million. He was met with a pop-up that his restrict was $50. After attempting to work it out with Olaf Carlson-Wee—Coinbase’s first worker, who would go on to change into a famed crypto determine in his personal proper—the agency agreed to extend his restrict all the best way to $300.
Morehead’s most spectacular achievement, nonetheless, could also be sticking it out through the doldrums of 2013 by way of 2016, when costs remained within the basement and nobody exterior of the insular blockchain neighborhood paid Bitcoin a lot thoughts. “In these quiet years the place crypto wasn’t doing shit, Dan was on the market beating the pavement,” Novogratz tells Fortune.
That epoch nonetheless had its highlights, together with three annual conferences hosted by Morehead out of his Lake Tahoe residence. At one, Jesse Powell, the founding father of the alternate Kraken, opted out of taking a non-public airplane chartered by Morehead and drove as a substitute. “There was a big sufficient fraction of the Bitcoin neighborhood [there] that he feared if the airplane crashed, it might take Bitcoin down,” Morehead recollects.
In contrast to a lot of his compatriots, Morehead by no means positioned himself as a “Bitcoin maxi,” or somebody who argues that no different cryptocurrencies ought to exist. After shopping for up 2% of the worldwide Bitcoin provide, Pantera turned an early investor in Ripple Labs, which created the digital asset XRP. “The best way I give it some thought is Bitcoin is clearly crucial,” Morehead says. “However there isn’t one web firm.”
In keeping with Morehead, Pantera has made cash on 86% of its enterprise investments. It’s a staggering determine contemplating that the overwhelming majority of VC-backed startups fail. Crypto could also be extra forgiving provided that many initiatives include an accompanying cryptocurrency, which means speculative worth typically endures even when a startup’s product goes nowhere.
Morehead now spends half his 12 months in Puerto Rico, which has change into a hotbed for crypto. Joey Krug, then a associate at Pantera and now at Peter Thiel’s Founders Fund, had relocated down there, and Morehead determined to make the transfer. He estimates there are 1,000 blockchain entrepreneurs on the island, although they’ve drawn scrutiny for driving up actual property costs. Morehead confronted an inquiry from the Senate Finance Committee over whether or not he violated federal tax legal guidelines by shifting to the island and incomes greater than $850 million in capital good points from Pantera. He informed the New York Occasions earlier this 12 months that he believed he “acted appropriately with respect to my taxes” and declined to remark additional to Fortune.
Bitcoin’s future
Morehead acknowledges that a lot of the crypto trade is saturated with playing, with Pantera staying away from memecoins, not like many different enterprise corporations. Nonetheless, he argues that it shouldn’t distract from blockchain’s broader objective of reshaping world finance. “It’s ridiculous to attempt to take down the blockchain trade due to a bit of sideshow,” he says. “[GameStop] doesn’t imply all the U.S. fairness market is tainted.”
Pantera continues to develop, together with elevating a fifth enterprise fund with a $1 billion goal, which Morehead says the agency will shut after ending investing out of its fourth fund later this 12 months. Pantera has additionally moved into the red-hot discipline of digital asset treasuries, the place publicly traded firms purchase and maintain cryptocurrencies on their steadiness sheets.
However Bitcoin stays on the core of Pantera’s technique. On the finish of final 12 months, its Bitcoin fund hit 1,000x, with a lifetime return of over 130,000%. When requested for a prediction of the place Bitcoin is headed, Morehead has at all times had the identical reply: The worth will double in a 12 months. For probably the most half, the easy mannequin has labored, although Morehead admits the times of fast development are doubtless slowing down. He argues Bitcoin will nonetheless go up one other order of magnitude, which means it would method $1,000,000, although he thinks that would be the final time it has a 10x improve.
Morehead is completely satisfied to shoulder the criticism if Bitcoin by no means reaches that milestone. In 2016, in any case, he was struggling to make the case for the cryptocurrency at $500. And fewer than a decade later, he’s simply getting began. “I’ve the identical conviction—the overwhelming majority of establishments have zero,” he tells Fortune. “It appears like we’ve one other couple of a long time to go.”
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