At a New York event on Tuesday, Dan Morehead, the CEO of Pantera Capital, expressed his belief that cryptocurrency markets are undervalued relative to artificial intelligence stocks. He characterized AI stocks as currently overheated after their impressive performance, marking one of the most significant divergences he has observed between these two sectors.
“My intuition tells me that while AI is crucial and will grow substantially over time, its current valuation suggests it’s already priced in,” Morehead remarked. In contrast, he labeled cryptocurrencies as “incredibly cheap.” Pantera’s data supports this perspective: an index of major AI companies is trading at 33% above its logarithmic trend from the last four years, while bitcoin (BTC) has significantly fallen below its historical path, being 43% undervalued relative to that trend—a gap Morehead described as “the largest in history.”
As investor interest shifts towards AI, evidenced by significant funding rounds and increasing public valuations, cryptocurrencies have struggled to regain their momentum despite growing adoption and regulatory advancements in the U.S.
“Most institutions still don’t grasp [cryptocurrencies], lacking any exposure,” Morehead observed. He noted that only a small portion of major investors currently hold digital assets, even as these assets mature. This scenario contrasts sharply with AI investment trends, where growth expectations are quickly reflected in market prices.
Morehead highlighted structural cycles within crypto markets, specifically referencing the four-year cycle tied to bitcoin’s supply schedule. According to past patterns, he suggested that while the near-term outlook might remain weak, long-term prospects continue to be positive.
Beyond relative valuations, Morehead linked cryptocurrencies’ appeal to macroeconomic trends, viewing them as a hedge against currency devaluation amid inflation and monetary expansion. He stated, “It’s actually all those things aren’t moving. It’s a massive devaluation of paper money.”
Morehead also discussed the convergence between AI and blockchain technologies. Pantera has invested in projects at this intersection, underscoring their interdependence. “There’s really no world where AI is important that crypto isn’t part of it,” he asserted.
Currently, Morehead sees cryptocurrencies as a relative value trade. As capital continues to flow into AI, his thesis hinges on the belief that markets will eventually rebalance, redirecting attention towards digital assets that he believes remain underpriced.