Dan Morehead, founder and CEO of Pantera Capital, believes that the cryptocurrency market is undervalued in comparison to the artificial intelligence sector, which has experienced a significant surge. Morehead expressed this sentiment during an event in New York, stating that the divergence between the two sectors is one of the largest he has witnessed. He noted that although AI is expected to experience substantial growth in the long term, its current valuation appears to be fully priced.
In contrast, Morehead views the cryptocurrency market, particularly bitcoin, as being extremely cheap. Pantera's internal data supports this view, indicating that an index of leading AI companies is currently trading 33% above its four-year logarithmic trend, while bitcoin has fallen 43% below its historical trajectory. This disparity has arisen as investor enthusiasm has shifted towards AI, with substantial funding rounds and increasing public market valuations, whereas the cryptocurrency market has struggled to regain momentum despite broader adoption and regulatory progress in the US. Morehead attributes this to the fact that the majority of institutions still do not have exposure to cryptocurrencies, leaving room for future demand.
He also highlighted the structural cycles in crypto markets, citing the four-year cycle of bitcoin's supply schedule, which could result in a weaker market phase in the near term. However, Morehead remains optimistic about the long-term outlook, tying the appeal of cryptocurrencies to broader macro trends, such as their potential as a hedge against currency devaluation.
He also noted the convergence between AI and blockchain technologies, arguing that the two sectors are interconnected and that Pantera has invested in several projects at their intersection.