• The $1 Bln+ AUM digital asset firm predicts the largest cryptocurrency will increase more than 200% in the next eight months
  • Pantera execs say increased institutional acceptance and interest from central banks will drive the rally

Pantera Capital predicts the largest digital asset will rise more than 200% in the next eight months to reach $115,00 by August 2021, insisting that Bitcoin’s latest run will not end the same way as its 2017 rally. 

“The picture for crypto is just so strong right now,” said Dan Morehead, founder, co-CIO and CEO of Pantera, on a conference call on Tuesday. “Six or so months ago, Bitcoin’s market cap was the same as L’Oreal Cosmetics, it’s now past Facebook, and that is just a huge difference in how the market perceives Bitcoin.” 

Compared to the 2017 bull run when the total market capitalization of cryptocurrency was fairly evenly distributed, the current rally has consolidated around Bitcoin and Ethereum. With Bitcoin being 72% of the total market and Ethereum making up 14%, the two digital tokens account for 86% of the total market capitalization. Other alternative coins, including Litecoin and Tether, make up 14% collectively. 

Pantera announced its investment into decentralized finance platform 1inch in December 2020, claiming that effective DeFi solutions will become more and more essential as cryptocurrencies continue to grow. 

DeFi was just beginning to develop in 2017 and 2018. The amount of value locked up in DeFi protocols was around $100-200 million in December 2019.  Today it is around $19 billion, up from just $1 billion in January 2020, according to data from Pantera. 

“It’s pretty different than in 2017,” said Joey Krug, co-CIO of Pantera. “The high level fundamentals for 2017 was that there really wasn’t much fundamentals at all, most projects were just an idea on a piece of paper, most things hadn’t launched, most things didn’t have live products.” 

With investor interest in cryptocurrencies at an all-time high, publicly traded companies and traditional financial institutions are starting to put Bitcoin on their balance sheets. Massachusetts Mutual recently purchased $100 million in Bitcoin, Square invested 1% of total assets into the digital token and Morgan Stanley now owns more than 10% of micro strategy equity. 

Central bank adaptation is also underway with China already testing what will likely be the world’s first sovereign digital currency and the U.S. Federal Reserve working with MIT to develop its own digital token.  

“This will bring billions of people into the market,” said Morehead. “There are over a billion people on earth that do not have access to a bank, but do have access to a smartphone, and that’s all you need to use a cryptocurrency.”

The Bitcoin mania has some wondering when the crypto bubble may burst or if the coin is overvalued, but Morehead is confident in the rally. 

“Is bitcoin overvalued? I would say no,” said Morehead. “Bitcoin has spent three years well below its long-term compound annual growth trend line, it’s still below it, and although Bitcoin has rallied a great deal over the last six months, I think it is fairly valued.” 

Pantera offers several crypto investment vehicles similar to to products like the Grayscale Bitcoin Trust (ticker GBTC) and the Bitwise 10 Crypto Index Fund (ticker BITW), but charges a 1.2% fee – vs. the 2% Grayscale charges – and does not trade at a premium to NAV. 

“One of the things that’s been mentioned to me, when looking at investing in a Pantera fund or investing through Coinbase,” said Paul Veradittakit, partner at Pantera, “is by investing through Pantera, you’re not worrying about the passwords and the headaches around that, so it’s really the peace of mind.” 

  • Blockworks
    Reporter
    Casey Wagner is a New York-based business journalist covering digital assets and macro economics. Prior to joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in Media Studies.