Uncovering the Founder of Pantera: The Legend of Buying the Dip on Bitcoin at $65 and Making a Thousand Times Return

Written by: Leo Schwartz, Fortune Magazine

Compiled by: Luffy, Foresight News

Dan Morehead, founder of Pantera Capital

In 2016, Dan Morehead embarked on a global journey to promote the "gospel" of Bitcoin. This former Goldman Sachs and Tiger Management trader was completely "conquered" by Bitcoin years ago and firmly believes it will reshape the global economy. His faith in this currency is so strong that he even came out of semi-retirement to transform his hedge fund Pantera Capital into one of the world's first Bitcoin funds.

This new business was launched in 2013, gaining momentum in its early stages with the support of two Princeton alumni, Pete Briger and Mike Novogratz, both from the private equity giant Fortress Investment Group. The three of them were delighted to see the Bitcoin bought by Pantera at an initial price of $65 soar to over $1,000 by the end of the year. But then disaster struck, as hackers raided the major exchange Mt. Gox in the emerging cryptocurrency industry, causing the price of Bitcoin to plummet by 85%. "People would say, 'Aren't you doing that dead Bitcoin thing?'" Morehead recalled. "It's still alive!" he would always respond.

During the Bitcoin roadshow in 2016, Morehead arranged 170 meetings. Every time he walked into a potential investor's office, he spent an hour arguing why this new asset was the most enticing opportunity. The result was that he only raised $1 million for a struggling fund. Worse yet, Morehead's own speaking fees totaled about $17,000. "I made $100 per meeting just to convince people to buy Bitcoin," he told Fortune magazine.

Less than a decade later, when the price of Bitcoin approached $120,000, Morehead's early difficult years had become part of the founder's myth — comparable to the stories of Apple’s Steve Jobs and Steve Wozniak tinkering with inventions in Jobs's parents' garage, or Warren Buffett and Charlie Munger exchanging stock trading insights at a dinner in Omaha.

Today, Pantera's various crypto funds manage over $4 billion in assets, holding positions in digital assets such as Bitcoin, Ethereum, and investments in projects like Circle (which went public in June) and Bitstamp (acquired by Robinhood for $200 million earlier this year). However, in the fiercely competitive field of crypto venture capital, what sets this company apart is its "pioneering" status: it is a renowned bridge between the conservative traditional finance world and the once-rebellious crypto industry. The core figure, Morehead, is a low-key pragmatist in an industry filled with legendary figures.

"I am very stubborn and completely believe that (Bitcoin) will change the world," Morehead told Fortune, "so I have kept at it."

The Wild Journey of Bitcoin

The price trend of Bitcoin since 2013. Data source: CoinGecko

Princeton "Gang"

In an era when Wall Street had not yet penetrated the blockchain industry, Morehead appeared out of place in the chaotic world of early cryptocurrencies. He was a dual-sport athlete at Princeton University (football and heavyweight rowing) and still retains the broad shoulders and square jawline of his youth. This is in stark contrast to those who are skeletal, eccentric, and spend all day immersed in online forums. On the contrary, Morehead comes from traditional finance, and he is still accustomed to wearing a suit jacket.

Before getting involved with Bitcoin, Morehead had a long trading career. After working at Goldman Sachs and Tiger Management, he founded his own hedge fund, Pantera, which went bankrupt during the financial crisis in 2008. Around that time, a mysterious figure named Satoshi Nakamoto published a white paper online, introducing Bitcoin to the world.

In 2011, Morehead first heard about Bitcoin from his brother and vaguely knew that his classmate from Princeton, Gavin Andresen, was running a website where users could earn 5 Bitcoins (currently worth about $575,000) by solving CAPTCHAs. But he didn't pay much attention until years later, when another classmate, Briger, invited him to the Fortress Investment Group's San Francisco office to chat about cryptocurrencies over coffee, with Novogratz also joining remotely. "Since then, I've been fascinated by Bitcoin," Morehead said.

The tech world is known for its so-called "gangs", such as the PayPal gang which later dominated the next generation of startups. In the crypto space, the "gang" does not come from a specific company, but from a university: Princeton has nurtured some of the most influential projects in the industry. Briger and Novogratz are both key supporters of Pantera, and Morehead even moved into the vacant space of Fortress Investment's San Francisco office. Briger still maintains a behind-the-scenes influence in the crypto space and recently joined the board of Michael Saylor's $100 billion Bitcoin holding company, Strategy. Novogratz founded Galaxy, becoming one of the largest crypto business groups. Another classmate, Joe Lubin, later became a co-founder of Ethereum.

But in 2013, Ivy League graduates who were active in high-end fields such as private equity and macro trading found Bitcoin intriguing, which still sounded outrageous. Briger told Fortune magazine that he first heard about Bitcoin from Argentine entrepreneur and early cryptocurrency enthusiast Wences Casares while they were sharing a room at a Young Presidents' Organization gathering on San Juan Islands. Briger quickly saw the potential to disrupt global payment systems, and he still maintains this belief, although he thinks Bitcoin is still in its infancy. He said that the prospects for Bitcoin are comparable to the internet, which facilitated a new form of information dissemination. "The way money flows hasn't kept up, which is really unfortunate," he said.

After sharing this idea with Novogratz, they believed that Morehead, with his foreign exchange market experience, was the right captain to steer the ship. When Morehead decided to dedicate the rest of his financial career to the crypto space, he repositioned Pantera as a Bitcoin fund, opening it up to external investors. Both Briger and Novogratz joined as limited partners, while Fortress Investment, venture capital firm Benchmark, and Ribbit participated as general partners (later exiting). His mentor at Tiger Fund, legendary investor Julian Robertson, also invested in a later fund.

The Rebirth of Pantera

In the early days of the cryptocurrency frenzy, entrepreneurs had to face severe market volatility, which pales in comparison to today's fluctuations. But Novogratz recalls that the biggest trouble was not the price rollercoaster, but the fact that it was nearly impossible to buy Bitcoin.

He once went to find Coinbase, which had only been established for a year at the time, wanting to buy 30,000 bitcoins, worth about 2 million dollars then. As a result, a window popped up, indicating that his limit was 50 dollars. After discussing with Olaf Carlson-Wee, the first employee of Coinbase who later became a well-known figure in the cryptocurrency world, Coinbase agreed to raise his limit to 300 dollars.

However, Morehead's most admirable achievement may be that he persevered during the downturn from 2013 to 2016. During that time, Bitcoin's price was stagnant, and nobody paid attention to it outside of the closed blockchain circle. "During those years when cryptocurrency was quiet, Dan was out there hustling," Novogratz told Fortune.

That era also had its highlights, including the three annual meetings held by Morehead at his home in Lake Tahoe. At one of them, Kraken founder Jesse Powell chose to drive instead of taking Morehead's chartered private jet. "At the time, there were quite a few people from the Bitcoin community on the plane, and he was worried that if the plane crashed, Bitcoin would be doomed as well," Morehead recalled.

Unlike many of his peers, Morehead has never positioned himself as a "Bitcoin maximalist" (that is, someone who argues that no other cryptocurrencies should exist). After purchasing 2% of the global Bitcoin supply, Pantera became an early investor in Ripple Labs, the company that issues the digital currency XRP. "My thinking is that Bitcoin is clearly the most important," Morehead said, "but there isn't just one internet company."

According to Morehead, 86% of Pantera's venture capital projects have turned a profit. Given that the vast majority of venture-backed startups fail, this number is astonishing. The crypto space may be more forgiving, as many projects hold cryptocurrencies, which means that even if a startup's product fails, the investment value often still persists.

Morehead now spends half of his time each year in Puerto Rico, which has become a hotbed for cryptocurrency. At that time, Joey Krug, a partner at Pantera who now works at Peter Thiel's Founders Fund, moved there, and Morehead decided to move there as well. He estimates there are about 1,000 blockchain entrepreneurs on the island, but they are scrutinized for driving up real estate prices. Morehead was investigated by the Senate Finance Committee, questioning whether he violated federal tax laws by relocating to the island and obtaining over $850 million in capital gains from Pantera. Earlier this year, he told The New York Times that he believes "he has acted properly in terms of taxes," but declined to comment further to Fortune.

The future of Bitcoin

Morehead acknowledged that the crypto industry is rife with gambling behavior, and Pantera does not dabble in Meme coins like many venture capital firms. However, he believes that this should not overshadow the grand goal of blockchain reshaping global finance. "It's absurd to think that a bit of side hustling could bring down the blockchain industry," he said, "The GameStop incident does not mean there is a problem with the entire U.S. stock market."

Pantera continues to expand, including raising its fifth venture capital fund with a target of $1 billion. Morehead stated that they will close fundraising after completing investments from the fourth fund later this year. Pantera has also ventured into the hot field of digital asset treasury management, where publicly traded companies incorporate cryptocurrency into their balance sheets.

But Bitcoin remains the core of Pantera's strategy. At the end of last year, its Bitcoin fund achieved a return rate of 1000 times, with a cumulative return rate exceeding 130,000%. When asked about the future price of Bitcoin, Morehead's answer has always been the same: it will double within a year. This simple model generally works, although he admits that the growth momentum may be slowing down. He believes Bitcoin will rise another order of magnitude, approaching 1 million dollars, but this will be the last 10-fold increase.

If Bitcoin can never reach that milestone, Morehead is also willing to bear the criticism. After all, in 2016, he was still struggling to defend Bitcoin at $500. And less than a decade later, he has just begun. "I believe that the vast majority of institutions' faith in Bitcoin is just beginning," he told Fortune magazine, "We have decades to go."