Sovereign Wealth Fund Hiring Blockchain Talent to Invest in Web3, Pantera Capital Raises $600M

Sovereign Wealth Fund Hiring Blockchain Talent to Invest in Web3, Pantera Capital Raises $600M for 4th Fund from Endowment

Funds continue to flow into the cryptocurrency market, with Pantera Capital being the latest to raise funding for its another crypto venture fund.

Pantera Capital has raised $600 million for its fourth venture fund, according to tech news site The Information, citing a person with direct knowledge of the matter.

The fund is expected to reach $1 billion when it closes in March and will invest in venture equity and crypto tokens that have launched and are in development.

About 75% of the capital for the new fund is coming from institutional sources such as endowments, much different from the firm’s $175 million it raised in 2018, which was mainly funded by individuals, including wealthy crypto investors.

Just two months back in September, Pantera raised $369 million for its then-new blockchain fund. As of August, the firm had $4.7 billion in assets under management.

Tiger Management alum Dan Morehead founded Pantera in 2003 as a global hedge fund which later shifted its focus to digital currencies and since then has backed more than 80 blockchain companies and 65 early-stage deals, including Coinbase, Circle, and Ripple.

The reservations of Pension funds, sovereign wealth funds, endowments, and other institutions are surely dissipating as they increasingly invest in crypto space this year. “Institutions are coming” is certainly not a meme anymore.

Banks are also increasing their efforts with Fidelity, UBS Asset Management, and State Street Global Advisors, confirming that they are looking into the potential of offering exposure to crypto, much like rivals BlackRock and Invesco.

Assets in European exchange-traded products (ETPs) and mutual funds with crypto exposure have topped €10.5 billion, according to Morningstar data.

Fidelity said it was “keeping close to the evolution of cryptocurrencies” as part of their wider exploration of the potential for digital assets, while Clemens Reuter, global head of ETFs at UBS, said, “(Cryptocurrency is) an area everyone needs to look at the moment.”

Citi is also hiring 100 people over the next several months to bolster its blockchain and digital assets divisions. The bank has also made Puneet Singhvi the head of digital assets for its Institutional Clients Group (ICG) as of Dec. 1.

“We are focused on assessing the needs of our clients in the digital asset space,” Citi has said in a statement.

Singapore sovereign wealth fund Temasek is another one hiring more blockchain talent to lead the efforts in exploring opportunities in AI and Blockchain technologies, “which the firm believes are long-term trends and will have a transformational impact across multiple industries and geographies.”

As per the job description on LinkedIn, Temasek is prioritizing projects on multi-currency payments, financial assets tokenization, and self-sovereign identity with a secondary focus on making select investments into web 3 venture funds and direct investments.

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Author: AnTy

“We’re In A New Bull Market,” says Pantera Capital CEO But Warns Of A Bitcoin Bear Trigger

Pantera Capital CEO Dan Morehead is now calling for a new bull cycle as Bitcoin price moves towards $60,000 after recovering from the June low that was just under $29,000.

“​​We had a period of temporary insanity,” wrote Morehead in this month’s note to investors, pointing to China banning cryptocurrency mining and trading that had a negative impact along with the debate on the environmental impact of Proof-of-Work consensus mechanism, adding, “now we’re in a new bull market.”

Already up more than 30% in October, Bitcoin price is currently only 13% away from its all-time high of nearly $65,000. The market is hopeful of a strong performance this quarter, with Q4 being historically a bullish month.

According to Morehead, the deep bear markets where we experienced drawdowns of over 80% may be a thing of the past, and future bear markets will now be “shallower.”

“As the market becomes broader, more valuable, and more institutional, the amplitude of price swings will moderate.”

But at the same time, we won’t be seeing any more of the 100x-in-a-year rallies either, he added.

The Bear Catalyst

While Morehead is confident in the second round of the bull cycle, he warned of a potential bear catalyst in the form of the launch of the Bitcoin exchange-traded fund (ETF).

As we reported, the market is highly hopeful that the US Securities and Exchange Commission (SEC) will finally approve a Bitcoin Futures ETF this month. SEC Chair Gensler has also been hinting at a possible futures-based ETF for months.

This could be why Bitcoin futures on the regulated exchange CME is trading at a much higher price than other exchanges. The CME bitcoin futures basis increasing at a faster rate suggests that institutional investors are buying BTC futures that can further put upward pressure on the crypto asset and lead to an even steeper curve.

Interestingly, as NYDIG pointed out, the number of contracts that a participant such as an ETF can own on the CME is also raised to a total of 6,000 starting October 18th. The decision on the first ETF filed by ProShares falls on the same day.

If SEC says nothing on this, the ETF “will be free to launch on 10/18 as the 75 days req will have passed,” said Eric Balchunas, Senior ETF Analyst for Bloomberg. “No news is prob good news at this point,” he added.

Meanwhile, to Morehead, this approval could turn out to be a ‘Buy the rumor, sell the fact’ much like two other past events.

Will History Repeat Itself?

The Pantera Capital CEO pointed to the launch of Bitcoin futures on CME in December 2017 and Coinbase going public via a direct listing in April this year as examples. The market rallied 2,440% the first time and 822% the second time but resulted in an 83% and 53% bear market, respectively.

The same can happen when Bitcoin ETF gets approved, said Morehead as he concluded:

“Will someone please remind the day before the Bitcoin ETF officially launches? I might want to take some chips off the table.”

Trader @SplitCapital, however, is not of the same opinion as he argued that the CME futures launch came at a time when the market was “coming off of the most frothy period in crypto history,” and funding rates were at 30% for short-dated futures. Similarly, during Coinbase’s IPO, there was the most amount of bitcoin openly traded in history.

This time, however, financing rates are averaging below 15%, open value is at record lows, and we have a renewed macro tailwind in the form of fiscal and monetary policy, which means this is not a classic ‘sell the news’ event, and “this time really is different.”

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Author: AnTy

Pantera Bitcoin Fund Clients, Including Institutional & HNWI Investors, Are HODLers

The blockchain investment fund, Pantera Capital, has completed its seven months, and its Bitcoin fund has generated a lifetime return of 15,140% net fees and expenses, “outperforming bitcoin over the same period.”

Pantera Bitcoin Fund provides institutions, and high-net-worth individuals access to large quantities of bitcoin without the burden of safekeeping them. It also offers daily liquidity, but most of its investors are long-term hodlers, with an average holding period of 841 days.

Bitcoin’s high volatility, 75% annualized volatility, is the most common concern of institutions in its adoption but also the reason behind such prominent gains, which made it the best performing asset class of the last decade.

Also, it used to be a lot higher and will be a lot lower in the next few decades, that’s just the way new asset classes work. “Volatility exists because it’s still a young asset class — bitcoin is just a teenager,” reads Pantera’s report released on Wednesday.

Despite this high volatility, bitcoin’s annual price low has been higher than the previous year’s low every time except for one year in its ten-year life.

Bitcoin Just a Tiny Fraction of All the Markets it can Disrupt

In 2020, bitcoin acted like a risky asset as it crashed along with the majority of the asset classes due to coronavirus pandemic. Starting last week, the digital asset started its journey as a digital gold — a safe haven asset and a hedge against inflation, as it went in the opposite direction of the S&P 500.

Bitcoin is currently trading around $11,000 after breaking two important key levels $10,000 and $10,500 earlier this week. BTC/USD is up over 50% YTD. Amidst these gains also came the green light from OCC that is now letting all nationally chartered banks in the U.S. provide custody services for digital assets.

It’s clear that bitcoin has many use cases, sometimes a store of value and others a centralized settlement system.

In terms of an alternative SoV to gold, bitcoin is just 2% of yellow metal’s $9 trillion market and as money, even a smaller fraction.

“With all these potential markets to disrupt, it really comes down to how many people choose to use it,” wrote Dan Morehead, CEO of Pantera.

“A few years ago, there were half a million people using it for speculation, commerce, remittances, and more. Now there are probably 50 million people using bitcoin and cryptocurrencies. And in a few years, if a billion people are using it, it’s going to be worth a lot more. It’s just supply and demand,” he said.

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Author: AnTy

Pantera Capital CEO Dan Morehead: Bitcoin Could Peak at $115,000 In August 2021

In these distressing times, there’s no knowing what’s going to happen, but Dan Morehead, CEO of Pantera Capital, “strongly” believes it’s almost inevitable that this will be “positive for cryptocurrency prices.”

This is because as Quantitative Easing approaches “infinity,” it has to have an impact on things whose quantity can’t be eased.

Founded in 2013, Pantera Capital was the first investment firm in the US to launch a digital currency, with a minimum investment of $100,000.

It’s just getting started

The government policy to increase the quantity of paper money has them, in turn, using that money to buy things like stocks and real estate that have fixed quantities. And it has already started bearing fruit as S&P 500 jumped over 17% in April which wouldn’t have been possible without trillions of new dollars, said Morehead.

This flood of new money according to him will float all boats, inflate the price of other fixed-quantity assets like gold, bitcoin, and other cryptos as well.

As we saw, Bitcoin ended April with 34% gains and is currently up over 23% YTD.

Pantera Capital’s principal argument for bitcoin in a portfolio is that it has had a 209% 9-year compound annual growth rate with zero long-term correlation to stocks, bonds, oil, or any other asset class.

But it is only the beginning for cryptos because for starters this recession won’t’ be V-shaped, said Morehead.

Looking back at the 2008 recession when the US real GDP fell by 4.3% and didn’t recover until three years, this recession is likely to resemble an L as well.

He further noted how most American families’ finances have been seriously damaged, small businesses are permanently closing and the economy has to recover in steps.

And the coronavirus that is both psychological shock and a physical constraint on economic activity will be difficult to counter-act with the standard economic policy tools.

Impact on crypto

During the last quarter, the Fed cut down the rates to zero percent which has been named “the lost decade” by Japan which invented Zero Interest Rate Policy (ZIRP) about 25 years ago.

When it comes to fiscal policy, it has been very “inefficient.” As per JP Morgan’s forecast, the US deficit is 19.5% of GDP, larger than the deficit during the Great Depression.

Meanwhile, as Pantera Capital had predicted in March, cryptos outperformed ventures, which are being bought at a discount of 20 to 36%.

Bitcoin’s correlation that reached its all-time high last month has begun to trade independently and is further expected to “drop off now.”

In the crypto market as well, bitcoin’s dominance climbed up to 66.40% from 64.60% in mid-march which is also expected to continue to gain but not as much.

But with the markets no longer range-bound, “long-biased strategies are now best,” projects Pantera Capital.

Post-Bitcoin Halving Rally

The government policies have also been bullish for the traditional haven asset. But Bitcoin still outperformed this safe-haven asset which is up only 13% YTD.

Interestingly, Bitcoin is preparing for this block reward halving in about five days. It is 100% QE proof with its fixed and known money supply and goes through halvings every four years which cuts the reward in half.

Although the past doesn’t predict the future — halvings have coincided with increases in price due to a perceived and/or real scarcity of supply.

According to Pantera Capital, it’s reasonable that the cut down in bitcoin’s new supply, ceteris paribus, “the price should rise.”

Historically, bitcoin has bottomed 459 days before the halving only to climb leading into it and then exploding to the upside afterward.

This time, the market took 514 days before the halving and if history were to repeat itself, bitcoin would peak in August 2021.

But each halving’s impact on price is tapering off. The second halving decreased supply only one-third as much as the first one had exactly one-third the price impact.

If this relationship holds, there would be 40% as much price impulse, as the reduction is only 40% as much as in 2016, meaning “bitcoin would peak at $115,212 /BTC.”

A ludicrous number today but back when Pantera Bitcoin Fund was first launched at $65 per BTC, their $5,000 prediction was just as ludicrous.

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Author: AnTy