Original title: Dan Morehead assembled his Princeton mafia to pile into Bitcoin at $65 in 2013, leaving his Wall Street career behind to build a $5 billion crypto fund
Original author: Leo Schwartz, Fortune magazine
Original translation by: Luffy, Foresight News
In 2016, Dan Morehead embarked on a global tour to spread the 'gospel' of Bitcoin. The former Goldman Sachs and Tiger Management trader had been 'thoroughly conquered' by Bitcoin years earlier and firmly believed it would reshape the global economy. His faith in this currency was 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 started in 2013 with initial momentum, supported by two Princeton alumni, Pete Briger and Mike Novogratz, both from the private equity giant Fortress Investment Group. The three watched with delight as Pantera purchased Bitcoin at an initial price of $65, which soared to over $1,000 by the end of the year. But then disaster struck when hackers raided the major exchange Mt. Gox in the emerging cryptocurrency industry, causing Bitcoin prices to plummet by 85%. 'People would say, 'Aren't you doing that Bitcoin thing that's already cooled off?' Morehead recalled. 'It's still alive!' he would always respond.
During the Bitcoin roadshow in 2016, Morehead arranged 170 meetings. Every time he entered a potential investor's office, he spent an hour arguing why this new asset was the most enticing opportunity. The result: he raised only $1 million for a struggling fund. Worse, 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, as Bitcoin prices approached $120,000, Morehead's early struggles had become part of the founder's myth—comparable to Steve Jobs and Steve Wozniak tinkering in Jobs' parents' garage or Warren Buffett and Charlie Munger exchanging stock market insights at an Omaha dinner.
Today, Pantera manages over $4 billion in assets across various crypto funds, with holdings including Bitcoin, Ethereum, and other digital assets, as well as investments in Circle (which went public in June) and Bitstamp (acquired by Robinhood for $200 million earlier this year). But in the highly competitive crypto venture capital space, the company's uniqueness lies in its 'pioneering' status: it is a renowned bridge between the conservative traditional finance world and the once-rebellious crypto industry. And the key figure, Morehead, is a low-profile pragmatist in an industry filled with legendary figures.
'I'm stubborn and completely believe (Bitcoin) will change the world,' Morehead told Fortune, 'so I've held on.'
The Wild Journey of Bitcoin
Bitcoin price trend since 2013. Data source: CoinGecko
Princeton 'Mafia'
In an era when Wall Street had not yet penetrated the blockchain industry, Morehead seemed 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 thin, eccentric, and spend all day on internet forums. Instead, Morehead comes from traditional finance and is still accustomed to wearing a suit jacket.
Before encountering Bitcoin, Morehead had a long trading career. After working at Goldman Sachs and Tiger Management, he founded his own hedge fund Pantera, which closed during the 2008 financial crisis. 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 Princeton classmate Gavin Andresen was running a website where users could solve a CAPTCHA to receive 5 bitcoins (currently valued at about $575,000). But he didn't pay much attention until a few years later when another classmate, Briger, invited him to the Fortress Investment Group's San Francisco office for coffee to talk about cryptocurrency, and Novogratz joined remotely. 'Since then, I've been captivated by Bitcoin,' Morehead said.
The tech world is famous for its so-called 'mafia,' such as the PayPal mafia who later dominated the next generation of startups. In the crypto space, the 'mafia' does not come from a company but from a university: Princeton has birthed some of the most influential projects in the industry. Briger and Novogratz are both key supporters of Pantera, and Morehead even moved into an unused space in Fortress Investment's San Francisco office. Briger continues to maintain influence behind the scenes 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 enterprise groups. Another classmate, Joe Lubin, later became a co-founder of Ethereum.
But in 2013, it still sounded absurd that an Ivy League graduate, active in high-end fields like private equity and macro trading, would be interested in Bitcoin. Briger told Fortune magazine that he first heard about Bitcoin from Argentine entrepreneur and early crypto enthusiast Wences Casares, while they were sharing a room at a Young Presidents’ Organization gathering in the San Juan Islands. Briger quickly saw the potential to disrupt the global payments system and still holds that view today, although he believes Bitcoin is still in its infancy. He said the prospects for Bitcoin are comparable to the internet, which enabled a new form of information dissemination. 'The flow of funds hasn't kept up, which is really unfortunate,' he said.
After sharing this idea with Novogratz, they believed that Morehead, with his experience in the foreign exchange market, was the right person to steer the ship. When Morehead decided to invest his financial career into the crypto field for the rest of his life, he repositioned Pantera as a Bitcoin fund, opening it to external investors. Briger and Novogratz both joined as limited partners, while Fortress Investment, venture capital firms Benchmark and Ribbit joined as general partners (later exiting). His mentor at Tiger Management, legendary investor Julian Robertson, also invested in a later fund.
The Rebirth of Pantera
In the early days of cryptocurrency noise, entrepreneurs had to face extreme market volatility, while today's volatility seems trivial. But Novogratz recalls that the biggest trouble wasn't the price rollercoaster but simply being unable to buy Bitcoin.
He went to Coinbase, which had only been established for a year, wanting to buy 30,000 bitcoins, then valued at around $2 million. A window popped up, indicating his limit was $50. After discussing with Coinbase's first employee, Olaf Carlson-Wee, who later became a well-known figure in the cryptocurrency space, Coinbase agreed to raise his limit to $300.
However, Morehead's most admirable achievement may be having persevered through the downturn from 2013 to 2016. During that period, Bitcoin prices languished, and no one cared except for the closed blockchain circle. 'During those quiet years for cryptocurrencies, Dan was always out there hustling,' Novogratz told Fortune.
That era also had its highlights, including three annual meetings held at Morehead's home in Lake Tahoe. At one of them, Kraken's founder Jesse Powell chose to drive instead of taking the private plane rented by Morehead. '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 too,' Morehead recalled.
Unlike many of his peers, Morehead never positions himself as a 'Bitcoin maximalist' (someone who advocates against the existence of other cryptocurrencies). After acquiring 2% of the global Bitcoin supply, Pantera became an early investor in Ripple Labs, which issued the digital currency XRP. 'My thought is that Bitcoin is clearly the most important,' Morehead said, 'but there is more than one internet company.'
According to Morehead, 86% of Pantera's venture capital projects are profitable. Given that the vast majority of venture-backed startups fail, this figure is shocking. The crypto space may be more forgiving, as many projects hold cryptocurrencies, meaning that even if a startup's product fails, the investment's value often persists.
Morehead now spends half of each year in Puerto Rico, which has become a hotspot for crypto. At that time, Pantera's partner, Joey Krug, who now works at Peter Thiel's Founders Fund, had moved there, and Morehead decided to relocate as well. He estimates there are about 1,000 blockchain entrepreneurs on the island, although they are scrutinized for driving up real estate prices. Morehead was investigated by the Senate Finance Committee, questioned whether he violated federal tax laws by moving 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 is 'behaving properly in tax matters' but declined to comment further to Fortune.
The Future of Bitcoin
Morehead admits that the crypto industry is rife with gambling behavior, and Pantera does not engage in meme coins like many venture capital firms. But he believes this should not overshadow the grand goal of blockchain reshaping global finance. 'It's absurd to want to bring down the blockchain industry over a bit of sideline behavior,' he said. 'The GameStop incident does not mean the entire U.S. stock market has a problem.'
Pantera continues to expand, including raising a fifth venture fund with a target of $1 billion. Morehead said he would close fundraising after completing investments from the fourth fund later this year. Pantera is also venturing into the hot digital asset treasury space, where public companies incorporate cryptocurrencies into their balance sheets.
But Bitcoin remains at the core of Pantera's strategy. By the end of last year, its Bitcoin fund had a return of 1,000 times, with cumulative returns 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 has generally worked, although he admits that the momentum for growth may be slowing. He believes Bitcoin will rise another order of magnitude, approaching $1 million, but that will be the last 10-fold increase.
If Bitcoin never reaches that milestone, Morehead is willing to face the criticism. After all, in 2016, he was still struggling to defend Bitcoin at $500. And less than a decade later, he's just getting started. 'I believe that the vast majority of institutions' belief in Bitcoin is just beginning,' he told Fortune magazine, 'We have decades to go.'
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