Dan Morehead, founder and CEO of Pantera Capital, believes that the cryptocurrency market is undervalued in comparison to AI stocks, which have experienced a significant surge. Morehead expressed this view at a New York event, stating that the divergence between the two sectors is one of the largest he has witnessed. He noted that while AI is crucial and expected to increase in value over time, it is currently fully priced.
In contrast, he described the crypto market as 'incredibly cheap'. Pantera's internal data supports this perspective, with an index of leading AI companies trading 33% above its four-year log trend, while bitcoin has fallen 43% below its historical trajectory.
Morehead attributed this gap to investor enthusiasm for AI, which has led to substantial funding rounds and rising public market valuations. Meanwhile, the crypto market has struggled to regain momentum despite broader adoption and regulatory progress in the US. Morehead stated that the majority of institutions still lack exposure to crypto, leaving room for future demand.
He also pointed to structural cycles in crypto markets, citing the four-year cycle related to bitcoin's supply schedule. If past patterns hold, the market could remain in a weaker phase in the near term while maintaining a positive long-term outlook. Morehead tied crypto's appeal to broader macro trends, describing digital assets as a hedge against currency debasement.
He noted that inflation and monetary expansion have driven investors towards scarce assets, resulting in a massive devaluation of paper money. Morehead also sees a convergence between AI and blockchain technologies, with Pantera investing in projects at their intersection. He argued that the two sectors are linked, stating that there is no scenario in which AI is important without crypto being part of it.
Pantera views crypto as a relative value trade for now, with Morehead's thesis resting on the idea that markets will eventually rebalance, drawing attention back to underpriced digital assets.