Pantera Capital Investors: The cryptocurrency movement hasn’t just produced a groundswell of support for digital currencies. While tokens like Bitcoin and Ether dominate conversations and attract most investor attention, several ancillary products have emerged around them.
For example, ICOs, Bitcoin futures contracts, and Bitcoin ETFs have provided important investment vehicles for crypto investors, and they’ve helped the nascent currencies more closely integrate with the established financial system. Each of these investment opportunities has their own followers and fans, one investment class, crypto-focused hedge funds have been uniquely prolific in their success.
The Rise of Crypto Hedge Funds
When the crypto boom began in January 2017, there were only 37 hedge funds with a dedicated crypto focus. By the end of the year, 167 crypto hedge funds would flood the market, and those numbers accelerated in 2018. According to Reuters, by February, more than 226 hedge funds adopted a crypto investment strategy.
These funds are led by financial institutionalists, rather than the ambitious individual investors who typically frequent crypto markets, reside somewhere between the traditional financial ecosystem and the novel crypto markets.
In this way, they are distinguished from hedge funds pursuing other markets. As a publication by Stanford scholars notes, “these crypto funds constitute a new type of financial institution that is not, and cannot be, governed by traditional hedge fund regulation because doing so would disregard the unique operational and technological features of cryptocurrencies.”
The Wall Street Journal estimates that hedge funds have more than $2 billion invested in Bitcoin, so they have considerable clout within the industry.
Like any industry, some companies are performing better than others, but one in particular, Pantera Capital, is consistently producing impressive returns. The Journal quipped, “Reports that one of the largest, a bitcoin hedge fund operated by Pantera Capital, was counting its returns in tens of thousands of percentage points hardly hurt their popularity.”
Pantera Capital Investors Report Huge Returns
This week, Pantera Capital celebrated its fifth anniversary. In an email to investors, co-chief of investors Dan Morehead and Joey Krug announced that the firm’s lifetime returns exceed 10,000%.
When Pantera Capital launched in 2013, Bitcoin traded near $100. As a result, early investors earned returns that accompany Bitcoin’s rise.
In the email, Mr. Morehead, who also serves as the company’s CEO, described the company’s fundamental belief that “bitcoin dominates cash, electronic fiat money, gold, bearer bonds, large stone discs, etc. It can do all of the things that each of those can. It’s the first global currency since gold. It’s the first borderless payment system ever.”
In addition, the email likened investing in Bitcoin in 2013 to investing in Microsoft when it was just beginning.
Pantera continues to support crypto development. The company invests in blockchain-based platforms including Basis, a stable coin startup, and Origin, a platform focused on the sharing economy.
Mr. Morehead indicated that the company would expand these efforts by launching new venture capital initiatives that will travel the world to hear about new blockchain initiatives.