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👀 41,963% returns. Here's what's next

👀 41,963% returns. Here's what's next

PLUS: Will crypto rally

Alex M.
July 18, 2023

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: you know how, once in a while, you come across someone you probably should have listened to? Well - these guys made over 40,000% in the last decade… and here’s where they think things are going next.

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

Unless you’re a crypto fantastic, you probably haven’t heard of Pantera Capital.

They launched the first bitcoin fund 10 years ago - which is up 41,963%. Crazy.

In 2013, when bitcoin was trading at $104, the founder Dan Morehead sent out a note to his clients in which he equated buying bitcoin to buying gold in 1,000 BC. Baller move.

He also personally bought $2M of bitcoin when they were trading at $65…

it’s like gold, but digital

Last week, Dan published his latest note. Here’s what it said:

1/ Interest rates will likely go higher for longer.

Historically, the US central bank has kept interest rates 1-2% above the level of inflation (core CPI).

The latest core CPI reading came in at 4.8%.

“If a Martian landed and was handed all the economic statistics for the United States and asked what the appropriate monetary policy was, he would say 7% for several more years.”

2/ Traditional markets may struggle with this, but blockchain could be a safe haven.

For most of Bitcoin’s history, its correlation to the S&P 500 was almost zero (0.03).

But with the rise of speculators using a ton of leverage, the correlation rose to 0.76 - meaning highly correlated.

That’s changing again. Bitcoin should have no relation to interest rates. And its correlation is back down to 0.1 (low correlation).

By the way, if you zoom out, the lack of correlation is obvious:

3/ The market can only be down for so long.

Regardless of rates or Bitcoin’s correlation to the S&P 500 - there’s only so much pain investors can endure.

Eventually, the market rallies. Now looks like one of those times:

“It’s been a full year since TerraLUNA/SBF/etc. It’s been enough time. We can rally now.”

4/ Blackrock will change the game

Dan ends his note talking about the Blackrock ETF - the best thing to happen to crypto since sliced bread.

“If approved, we anticipate a significant impact to crypto similar to the launch of BlackRock’s iShares Gold ETF in January 2005, which coincided when gold was trading at $423 per ounce.

Today, the price of gold stands around $1,950 per ounce.”

This is what we talked about in yesterday’s email.

He attached a now-famous screenshot of two CNBC headlines:

“This reaffirms my faith that when smart people actually take the time to read and think about blockchain – not just a reactionary sound bite – 95% of them end up believing it’s going to be massively important.

One new adherent at a time.”

Dan’s been right a lot. We hope he’s right this time around too.

You can read his full essay here.