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 his views 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, its current pricing seems overly inflated, whereas crypto is relatively inexpensive. Pantera's internal data supports this perspective, indicating that a leading AI company index is trading 33% above its four-year log trend, while bitcoin has fallen substantially below its historical trajectory, making it 43% undervalued. This disparity has arisen as investor interest has shifted towards AI, with substantial funding rounds and increasing public market valuations, whereas crypto has struggled to regain momentum despite broader adoption and regulatory progress in the US.
Morehead pointed out that the majority of institutions still lack exposure to crypto, leaving room for future demand. He also highlighted the structural cycles in crypto markets, citing bitcoin's supply schedule and the potential for a weaker phase in the near term. Additionally, Morehead emphasized the appeal of crypto as a hedge against currency devaluation, given the current inflation and monetary expansion.
He also sees a convergence between AI and blockchain technologies, with Pantera investing in projects at this intersection. Morehead argued that the two sectors are interconnected, 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, with Morehead's thesis resting on the idea that markets will eventually rebalance, drawing attention back to underpriced digital assets.