‘Nobody Big Enough’ to Manipulate Bitcoin, but Altcoins Offer Superior Returns, Pantera’s Morehead Says

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June 26, 2023

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Around USD 70bn is traded in the bitcoin (BTC) market every day, meaning that the market is too large for any single actor to manipulate, crypto hedge fund Pantera Capital’s CEO Dan Morehead said, explaining his firm’s strategy of focusing on altcoin investing.

The argument that the bitcoin price is prone to manipulation is one that is often mentioned by the US Securities and Exchange Commission (SEC) as a reason why it does not allow spot-based bitcoin exchange-traded funds (ETFs) to be listed in the US.

According to Morehead, however, the argument is not valid due to the massive size the bitcoin market has grown into.

“There’s USD 70bn a day in bitcoin trading, there’s nobody big enough to manipulate that market. And there’s all kinds of crazy other stuff – like GameStop – that can be manipulated,” Morehead said during a livestreamed panel discussion on Tuesday hosted by the Financial Times.

He added that there is – in his view – no reason why crypto and blockchain technology cannot just be seen by regulators and investors as “a normal asset class like everything else.”

“There are massive exchanges, and incredible price discovery,” Morehead said about the broader crypto market.

Meanwhile, Morehead, who is known as an investor in many smaller altcoins and crypto projects, also delivered a defense for why institutions should embrace altcoin investing rather than just bitcoin.

“There’s so much creativity happening now. There are 150 projects that are liquid enough to trade and that are really important. Investors really should have exposure to a broader range of things,” Morehead said, noting that he does not believe BTC alone can serve as an effective proxy for all of the crypto market any longer.

It’s kind of like in the late 90s when Microsoft controlled almost all of the technology industry, but 90% of the future gains came from Amazon, Facebook, and other companies, the investor said.

In the same discussion, Blair Halliday, the regional head for the UK at crypto exchange Gemini, said 2022 will be “the year of the regulator.”

That comes after a Gemini survey last year showed that 20% of the respondents in the UK have become involved in crypto as of 2021, with about 40% of those getting involved in the last year alone.

After the “transformational year” last year, however, regulators are now trying to get a greater hold on the industry, Halliday said, adding that he sees this increased involvement as “inevitable.”

The increased regulatory attention will also be good for the industry long-term, Halliday said, explaining that institutions “need to get even more confident in the crypto space” before making substantial investments.

Sovereign wealth funds

Lastly, as the discussion wrapped up, the panelists were asked by the moderator whether they believe a sovereign wealth fund would get involved in the crypto market “in a year’s time.”

To this, all of the participants answered “yes,” with Morehead perhaps being most bullish with his comment, saying that he even believes “a central bank will be buying bitcoin in the next year.”

Sovereign wealth funds and central banks are known as the world’s largest buyers of assets, and any involvement of these entities in the bitcoin market is believed to be a major new driver for the bitcoin price.

For now, El Salvador is the only country that is known to hold bitcoin directly in its reserves, with the Central Reserve Bank of El Salvador purchasing bitcoin on the country’s behalf.
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