‘Nobody Big Enough’ to Manipulate Bitcoin, Pantera’s Morehead Says

Every day, about USD 70 billion worth of bitcoin (BTC) is traded in the market. According to Pantera Capital’s CEO Dan Morehead, this means that the market is way too large for any single actor to manipulate, explaining the reasoning behind his firm’s strategy of focusing on altcoin investing.

“If you look at the M1 money supply for the United States, it’s about USD 4 trillion. The market capitalization of bitcoin is now about USD 2 trillion. So, it’s a big market, but it’s still tiny compared to other asset classes,” Morehead said in a live-streamed panel discussion on Tuesday hosted by the Financial Times.

The US Securities and Exchange Commission (SEC) often mentions that the price level of bitcoin can be easily manipulated and that’s why the SEC does not allow spot-based bitcoin exchange-traded funds (ETFs) to be listed in the US financial market.

But Morehead said that no one has enough money to manipulate the price of bitcoin because the market is global now and people are buying and selling bitcoins all over the world.

“I think it would be very hard for somebody to manipulate the bitcoin price because it’s a global market now. It’s traded 24 hours a day,” Morehead explained.

The topic of bitcoin and market manipulation has been a hot topic in recent months, as many investors have expressed concern that large players could be influencing the price.

In February, a whistleblower from Chicago-based proprietary trading firm Jump Trading LLC named Igor Kovalchuk came forward to claim that some of his colleagues in the trading department were engaging in illegal bitcoin manipulation activities.

However, Morehead said that these types of manipulation attempts are unlikely to be successful in the long run.

“The bitcoin market is just too big now,” he said. “There’s nobody big enough to move the market for an extended period.”

Morehead also addressed the recent report from JPMorgan Chase & Co. that claimed that bitcoin could reach $146,000 if it becomes a mainstream asset class. While Morehead said that this price target was “certainly possible,” he cautioned that it was still early days for bitcoin and that a lot can change in the coming years.

“I wouldn’t want to put a number on it because I think we’re still in the very early innings of this,” he said. “I think it’s certainly possible that bitcoin could be worth that much or more eventually. But I wouldn’t want to put a timeframe on it.”

Morehead further added that in his opinion, there is no reason why crypto and blockchain technology cannot be considered by regulators and investors as “a normal asset class like everything else.”

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 focusing on only bitcoin.

“I think it is perfectly rational for an institution to want to allocate 1% or less of its assets to bitcoin, and then maybe another 5% to 10% to a broad portfolio of other cryptocurrencies,” Morehead said. “And I actually think that’s probably the right strategic asset allocation for most institutions.”

He added:

“If you look at the last five years, if you had put 1% of your assets in bitcoin and 9% in cash, you would have done about 2x better than if you had just invested 10% in bitcoin. So, I actually think there is a very strong argument that says you should own a bunch of different cryptocurrencies. And I do think that the right allocation is probably somewhere between 1% and 10%.”

Morehead explained that bitcoin has proven to be a strong store of value. Its market capitalization represents around 50% of all the cryptocurrency market, he noted.

In terms of investment opportunities in bitcoin and other cryptocurrencies, Morehead said institutions can choose from a wide range of assets. “You could buy into any individual blockchain like Ethereum or Ripple’s XRP or you could buy baskets like Bitcoin Investment Trust or Grayscale or Bitwise Asset Management, which have about 90% exposure to bitcoin but much-reduced volatility than owning it directly.”

As the discussion panel 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.”

Latest News