Fortune: Dan Morehead and the Princeton "Mafia"

In 2016, Dan Morehead embarked on a global tour to spread the gospel of Bitcoin. A former trader at Goldman Sachs and Tiger Management, Morehead had become deeply interested in Bitcoin several years earlier, convinced it would reshape the global economy. His belief in Bitcoin was so strong that he emerged from semi-retirement to reshape his hedge fund, Pantera Capital, into one of the world's first Bitcoin funds.

The new venture, launched in 2013, got off to a strong start, garnering support from two of Morehead's Princeton alumni, Pete Briger and Mike Novogratz, both from private equity giant Fortress.

The trio watched with delight as Pantera's initial Bitcoin purchase at $65 soared to over $1,000 by the end of 2013. Then disaster struck: hackers robbed Mt. Gox, the main exchange in the nascent cryptocurrency industry, and the price of Bitcoin plummeted 85%. "People would say, 'Aren't you working on that dead Bitcoin project?'" Morehead recalls. "It's still alive!" he would respond. In 2016, Morehead attended 170 meetings on his Bitcoin promotional tour, walking into the offices of potential investors and spending an hour explaining why the new currency was a compelling investment opportunity. The result: he raised only $1 million for his shaky fund. To make matters worse, Morehead's own travel expenses, including flights and hotel, totaled approximately $17,000. "I was only making $100 per meeting just to get people to buy Bitcoin," he told Fortune. Less than a decade later, with Bitcoin's price exceeding $120,000, Morehead's early struggles seem like a plot point in the mythology of founders, comparable to stories of Apple's Steve Jobs and Steve Wozniak tinkering in Jobs' parents' garage, or Warren Buffett and Charlie Munger exchanging stock tips at Omaha dinners. Today, Pantera manages over $5 billion in assets across various crypto funds. Its holdings include digital assets like Bitcoin and Ethereum, as well as venture investments in projects like Circle (which went public in June) and Bitstamp (acquired by Robinhood for $200 million earlier this year). Pantera stands out among crypto venture capital firms for its pioneering role, building a legendary bridge between the conservative world of traditional finance and the once-rebellious world of crypto. At its core is Morehead, a relatively unknown figure in an industry dominated by legends. "I'm stubborn, and I absolutely believe Bitcoin will change the world," Pantera told Fortune. "So I'm going to keep going." Before Wall Street infiltrated the blockchain industry, Morehead stood out in the chaotic world of the early cryptocurrency era. A football and heavyweight rower at Princeton University, Morehead still retains the broad shoulders and square jaw of his youth. His build is a stark contrast to the lanky, unconventional types who spend their days on online message boards. Morehead, by contrast, comes from the world of traditional finance. To this day, he's rarely seen without a suit jacket. Before discovering Bitcoin, Morehead had already had a long career as a trader. After stints at Goldman Sachs and Tiger Management, he founded his own hedge fund, Pantera. However, the fund collapsed during the 2008 financial crisis, just as a mysterious figure named Satoshi Nakamoto introduced Bitcoin to the world in an online white paper. Morehead first heard about Bitcoin in 2011 from his brother. He also had a vague idea that a Princeton classmate, Gavin Andresen, ran a website where anyone who completed a CAPTCHA could receive five Bitcoins (currently worth $575,000). But Morehead didn't think much of it until a few years later, when another classmate, Briger, invited Morehead to Fortres' San Francisco office for coffee to discuss cryptocurrency. Novogratz also called. "From then on, I was hooked on Bitcoin," Morehead said. The tech world is known for its so-called "Mafia"—a group of employees from prominent organizations like PayPal who go on to lead the next generation of startups. In crypto, it's not a company, but a university, that has shaped some of the industry's most influential projects. Both Briger and Novogratz are major backers of Pantera, with Morehead even moving into vacant office space at Fortress' San Francisco offices. While a behind-the-scenes figure, Briger remains a powerful influence in the crypto world, most recently joining the board of Michael Saylor's $100 billion Bitcoin holding company, Strategy. Novogratz later founded Galaxy, one of its largest crypto groups. Another classmate, Joe Lubin, went on to co-founder Ethereum. But in 2013, for Ivy League graduates working in rarefied fields like private equity and macro trading, an interest in Bitcoin still seemed out of reach. Briger told Fortune that he first heard about Bitcoin from Wences Casares, an Argentinian entrepreneur and early cryptocurrency adopter, while sharing a room with Casares at a Young Presidents' Organization gathering in the San Juan Islands. Briger quickly saw the appeal of disrupting the global payments system—a view he still holds to this day, despite believing Bitcoin is still in its infancy. He says Bitcoin reflects the promise of the internet, which facilitated a new form of information flow. "It's a shame that money doesn't flow the same way," he says. After sharing the idea with Novogratz, they decided that Morehead, with his experience in the foreign exchange market, was the right person for the job. When Morehead decided to devote the rest of his financial career to cryptocurrency, he renamed Pantera the Bitcoin Fund and reopened it to outside investors. Both Briger and Novogratz invested as limited partners, while Fortress and venture firms Benchmark and Ribbitt invested as general partners, though they all subsequently exited. Morehead's mentor at Tiger Management, legendary investor Julian Robertson, even backed a later fund. The Rebirth of Pantera: In the early, heady days of cryptocurrency, entrepreneurs had to navigate dramatic booms and busts, and today's volatility seems fleeting. But Novogratz recalls that the wild price swings weren't the biggest problem. The biggest headache was simply getting started with buying Bitcoin in the first place. Morehead logged into Coinbase, then only a year old, and tried to buy 30,000 bitcoins, which were selling for around $2 million. A pop-up window informed him of a $50 limit. After trying to communicate with Coinbase's first employee, Olaf Carlson-Wee, Coinbase agreed to increase his limit to $300. Olaf Carlson-Wee later founded Polychain Capital and became a prominent crypto figure. Perhaps Morehead's most impressive achievement, however, was persevering through the downturn from 2013 to 2016. Bitcoin prices were stagnant at the time, and few outside the insular blockchain community paid much attention to the cryptocurrency. "During those quiet years in crypto, Morehead was constantly on the move," Novogratz told Fortune. There were still some highlights from that period, including the three annual conferences Morehead hosted from his home in Lake Tahoe. At one of those meetings, Jesse Powell, co-founder of the exchange Kraken, opted not to fly on a private jet chartered by Morehead, instead driving himself. "Kraken holds a significant amount of BTC held by the Bitcoin community, and he was worried that if the plane crashed, Bitcoin would crash," Morehead recalled. Unlike many of his peers, Morehead has never characterized himself as a "Bitcoin maximalist" or someone who believes other cryptocurrencies shouldn't exist. After acquiring 2% of the world's Bitcoin supply, Pantera became an early investor in Ripple Labs, which created the digital asset XRP. "I think Bitcoin is clearly the most important," Morehead says, "but there's more than just one internet company." According to Morehead, 86% of Pantera's venture capital investments have been profitable, a staggering figure considering the vast majority of venture-backed startups fail. The cryptocurrency investment environment may be more forgiving because many projects come with accompanying cryptocurrencies, meaning that even if a startup's product doesn't make any progress, its speculative value often persists. Morehead now spends half of his time each year in Puerto Rico, which has become a hotbed for cryptocurrency. When Joey Krug, a Pantera partner and current manager of Peter Thiel's Founders Fund, moved there, Morehead decided to do the same. He estimates there are 1,000 blockchain entrepreneurs on the island, though they have come under scrutiny for driving up real estate prices. Morehead faces an investigation by the U.S. Senate Finance Committee into whether he violated federal tax laws by moving to the island and accumulating over $850 million in capital gains from Pantera. He told The New York Times earlier this year that he believed he "acted appropriately with respect to taxes" and declined to comment further to Fortune. Morehead acknowledges that the cryptocurrency industry is rife with gambling, and that Pantera, unlike many other venture capital firms, has stayed away from memecoins. However, he argues that this shouldn't distract from blockchain's broader goal of reshaping global finance. "Trying to destroy the blockchain industry over a minor incident is ridiculous," he said. "GameStop doesn't mean the entire U.S. stock market is tainted." Pantera continues to grow, including raising its fifth venture fund with a target size of $1 billion. Morehead said Pantera will close on this new fund after fully investing its fourth fund later this year. Pantera has also entered the hot digital asset treasury sector, where publicly traded companies purchase cryptocurrencies and hold them on their balance sheets. But Bitcoin remains the core of Pantera's strategy. By the end of 2024, its Bitcoin fund had gained 1,000 times its value, with a cumulative return of over 130,000%. When asked for his prediction for Bitcoin's future, Morehead's answer remains consistent: the price will double within a year. For the most part, this simple model works, though Morehead acknowledges that the rapid growth may be slowing. He believes Bitcoin will still rise by another order of magnitude, meaning it will approach $1 million, though he believes this will be the last time it experiences a 10x increase. If Bitcoin never reaches that milestone, Morehead is willing to take the heat. After all, in 2016, when Bitcoin was still trading at $500, he labored to justify the cryptocurrency's reputation. And less than a decade later, he's spreading his newfound convictions. "My conviction remains unchanged—but the vast majority of institutions have no faith in it," he told Fortune. "I feel like we're still decades away."