'Although bitcoin is very volatile, it’s only had one year where it’s printed a new low': Pantera Capital CEO

Pantera Capital CEO & Co-Chief Investment Officer, Dan Morehead, joined Yahoo Finance Live to break down his thoughts on Bitcoin's volatility and why the upside may outweigh the risk.

Video Transcript

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JARED BLIKRE: Welcome back to Yahoo Finance. I'm Jared Blikre. Well, it's time for a Crypto Corner, last one of the week. And it's been a tough week-- or a couple of weeks, for crypto, really-- with a slide in Bitcoin and all the coins. And guess what? Regulators are upping the ante here and they're warning about fraud and volatility, and Bitcoin futures and Bitcoin products in general.

For this, we want to bring in Dan Morehead, Pantera Capital CEO. So what are you making-- what are you making of this latest growing chorus of regulators speaking out against the volatility in crypto?

DAN MOREHEAD: I think they're just doing their job to make sure investors know that it's a young, speculative asset class and that they should potentially have less exposure to it than they would, say, IBM stock or something with very low volatility. The thing to keep in mind is, although Bitcoin is very volatile, it's only had one year where it's printed a new low. So in the last 10 years, nine of them have been up. And so although it is volatile, most of the volatility is on the upside.

SEANA SMITH: Dan, do you think the regulatory concerns-- is this something to worry about? Or is it, on the flip side, a bigger step towards legitimacy and acceptance?

DAN MOREHEAD: Oh, I think it is. And I think, in general, the regulators have done a great job with cryptocurrency. Eight years ago, we launched the first crypto fund in the US. And we decided to launch it as a hedge fund because we thought the SEC would take some time before they approved an ETF. Eight years later, we're still waiting for that. But it's all within the spectrum of something that's going to take decades to play out. So I'm not too concerned.

JARED BLIKRE: And what do you see those next steps? Because we heard this week, at least one firm is offering-- is joining with Coinbase to offer cryptocurrency to 401(k) customers. You have the continued institutionalization and roll out as various asset managers and, I guess, banks build platforms, as do broker dealers. Where are we in this space? And where do you see the next innovations coming?

DAN MOREHEAD: Yeah, so that's a great way to say it, that a few years ago, the big issue in the space was no big regulated custodians. And now we have a half a dozen very, very stable, well-known custodians like Fidelity that do custody. The OCC now allows any nationally-chartered bank to do custody, so you have a number of banks offering that. And just in the last three or four months, many of the major Wall Street firms have come out with Bitcoin or cryptocurrency offerings. That's helping more people get exposure to the space.

And then in terms of within the ecosystem itself, decentralized finance is the kind of biggest use case right now. It's taking the middleman out of borrowing and lending or exchanging assets on exchanges.

SEANA SMITH: Let's take a look at what's happening around the world, because this week, we had El Salvador adopting Bitcoin as a legal tender, the first country to do this. How big of a milestone is this for Bitcoin, just in terms of, I guess, have we turned a corner now for the cryptocurrency?

DAN MOREHEAD: It is. I mean, it's a huge milestone. The country is taking it as legal tender. It just credentialises the currency. And you can see more businesses, more-- and potentially more governments. Ultimately, I think most central banks will own some cryptocurrency as a reserve asset. A lot of corporations are already doing that. It's appreciating relative to paper money, so it's a much, I would say, safer place to have your savings rather than in paper money, which is being debased at a rapid rate.

JARED BLIKRE: All right, we only got a minute here. What about that Bitcoin ETF in the US that you were just talking about? How close are we? Do you see it this year, even?

DAN MOREHEAD: Oh, it's been a parlor game for the last eight years, predicting when it's going to come. It seems like it would come within the next 12 months, that the standard for a cryptocurrency ETF seems to be much higher than it is on other asset classes, like platinum or palladium. Bitcoin trade $70 billion a day on hundreds of exchanges in dozens of countries, so it really is extremely difficult to push around, which is one of the main worries when regulators are trying to decide whether an asset class is worthy of an ETF.

JARED BLIKRE: Yeah, helpful to remind everybody that the volatility in Bitcoin was actually much greater two to three years ago. All right, Dan Moorhead, Pantera Capital CEO, thank you for joining--