Conversation with Pantera Founder: Bitcoin Has Reached Escape Velocity, Traditional Assets Are Being Left Behind

Original Compilation: Baihua Blockchain

In this interview, Wilfred Frost conducted a second in-depth conversation with Dan Morehead, founder of Pantera Capital. They discussed Bitcoin’s positioning in the cycle after a 50% retracement from its highs; how fiat currency depreciation creates generational wealth conflict; and why the “smart money” is the last to enter this round.

Key Insights Summary

• Most institutional investors still have a 0.0% allocation to blockchain, literally zero.
• It’s not that gold hit a new high; it’s that paper currency hit a historic low.
• This might be the first trade in history where the “smart money” is the last to enter.
• The average age of first-time homebuyers in the US has been pushed back from 28 to 40.
• We are facing a generational inflection point where money is separating from the state.
• Stablecoins are highly likely to take half of bank deposits within a decade.
• Bitcoin has reached escape velocity; I can’t find any factor that could derail this process.
• If you have no blockchain exposure, you are, in a way, shorting this trend.

01. “Still the Most Asymmetric Trade in History”

Host: Last time you were here, we delved deep into the macro logic of 加密貨幣currencies. The price at which you first bought Bitcoin was astonishingly low; what was it again?

Dan Morehead: $65.

Host: $65, compared to today’s price of around $66,000, it’s like two different worlds. In that episode, you described Bitcoin as “the most asymmetric trade in history.” Do you still hold that view today?

Dan Morehead: Yes, I’m still convinced of that. Throughout my career, I’ve been looking for asymmetric opportunities where the upside potential far outweighs the downside risk. Bitcoin, and the broader crypto space, is the most asymmetric trade I’ve ever seen.

In the early days, I would tell people: you could very well lose all your principal, so don’t invest more than you can afford to lose. But at the same time, you have the potential for 5x, 10x, or even thousand-fold returns.

The reason I’m still bullish is that we are still in the very early stages. Most institutional investors still have a 0.0% allocation to blockchain and cryptocurrencies. Literally zero. As long as the downside risk is negligible relative to the massive global financial asset base, and the upside is re德菲ning the entire monetary system, this asymmetry will not disappear.

02. The Four-Year Cycle Holds True Again

Host: Our last recording was on October 12th, which was interesting timing. Around October 6th, cryptocurrencies reached a local high, followed by a pullback. Since then, Bitcoin has fallen about 50%. As someone who has experienced multiple cycles, how do you interpret this sharp decline?

Dan Morehead: Anything trying to change the world comes with a lot of hype and volatility. At peaks, optimism is rampant; at troughs, pessimism abounds. Pantera has been deeply involved in this industry for 13 years, experiencing four full four-year cycles. These cycles are actually very regular, even predictable.

When we met in October, we were right around the local high we predicted two or three years ago. Based on our model from the previous three cycles, we estimated Bitcoin would reach a local high around August 2025. While we hoped this time might be different—perhaps new government policies could break the cycle—in hindsight, the cycle pattern has once again asserted itself. The market corrected by 50%. That sounds like a lot, but compared to the 85% drops in previous cycles, this one is much milder. The market may still need about a year to bottom out, consistent with past patterns.

Host: You didn’t seem bearish back then. Do you think this cycle will ultimately drop 75% to 80% like before?

Dan Morehead: That’s a key question. I didn’t actually predict such a large drop at the time because there were many positive factors. But the market has its own rhythm. I want to point out that at previous peaks, prices deviated wildly from the long-term logarithmic trend line, showing crazy parabolic moves. For example, in 2013, the price increased 10-fold in the four months before the peak. This time, there hasn’t been that kind of extreme overheating; it just roughly returned to the 2021 level.

So I think the current price range is likely the bottom area. Although it may still take six to eight months to form a solid base, if you have a four to five-year investment horizon, this is a very attractive entry point.

Host: The current price is around $66,000. Many technical analysts say $60,000 is a key support level; if it breaks, it could fall all the way to $25,000. Do you agree?

Dan Morehead: I’m not good at that technical analysis stuff. We never try to do ultra-short-term timing trades. Our approach to managing funds is more like venture capital, with a 5-year, 10-year, or even 20-year perspective. From that angle, the current price is already quite cheap.

03. Why is Bitcoin Always the First to Get Sold Off?

Host: Why is Bitcoin always the “whipping boy” among risk assets? When the Nasdaq and S&P 500 peak, cryptocurrencies are often the first to be sold. Will this continue forever?

Dan Morehead: That’s a very astute observation. Think about it: if a major shock occurs outside of Monday to Friday trading hours, you can’t sell stocks. Cryptocurrency is the only globally accessible, highly liquid market with a $2 trillion scale that operates 24/7, 365 days a year.

When a geopolitical crisis erupts, institutions want to reduce risk exposure immediately, and Bitcoin becomes the only asset they can liquidate in real-time. This causes it to bear excessive selling pressure in the short term. But note, while correlation spikes during “flash crash” moments, over the long term, Bitcoin’s correlation with the S&P 500 is actually very low, around 0.1 to 0.2. Over a multi-year timeframe, cryptocurrencies move independently upward, while traditional assets might just be treading water.

04. It’s Not Gold Hitting New Highs; It’s Paper Currency Hitting Historic Lows

Host: Let’s talk about gold. Gold is up 55% in the past 12 months, while Bitcoin is basically flat. Does this shake the “digital gold” narrative for Bitcoin?

Dan Morehead: Gold is an interesting “old-school” asset. It periodically comes back into the public spotlight. Before 2025, gold ETFs actually saw net outflows for many years, with funds flowing into Bitcoin ETFs. But in 2025, people suddenly realized the US dollar was depreciating at an accelerating pace, and this sense of urgency drove money back into gold.

But I think about this issue differently: It’s not that gold or real estate is hitting new highs; it’s that paper currency is hitting historic lows. As the printing presses keep running, the number of paper notes required to buy a fixed quantity of assets inevitably keeps rising. The word “pound” originally represented one pound of pure silver; now you need hundreds of paper notes to buy the same weight of silver. Governments can print money indefinitely; this is the core of the depreciation trade.

Host: Aren’t we in a staggering depreciation cycle right now?

Dan Morehead: Absolutely. The Fed defines “price stability” as 2% depreciation per year, which is absurd in itself. Stability should be zero. Even with just 2% annual depreciation, a person’s purchasing power over a lifetime shrinks by nearly 90%. (Editor’s note: At a 2% annual depreciation rate compounded, purchasing power shrinks by about 80% after 80 years.) I think people are waking up to the realization that they must hold hard assets with a fixed quantity, whether stocks, gold, or cryptocurrencies.

This depreciation trade also has a clear generational characteristic. Massive money printing pushes up asset prices, which benefits the older generation who already own property and stocks, but squeezes the upward mobility of the younger generation. The average age of first-time homebuyers in the US has been pushed back from 28 to 40. Since they can’t accumulate wealth through traditional paths, it’s a very rational choice for the younger generation to turn to cryptocurrencies. If you look at the wage growth curve versus the house price growth curve since 1990, you’ll see the divergence has become absurdly large.

05. The Separation of Money and State

Host: How do geopolitical conflicts change the logic for cryptocurrencies?

Dan Morehead: Wars always bring lasting inflation. But more importantly, we are witnessing the “separation of money and state.” In ancient times, money was gold, naturally independent of government. Later, governments monopolized the right to print money, but history shows they haven’t managed it well.

Over the next decade, people will gradually realize that money doesn’t need state backing. Geopolitical conflicts make this trend clearer—the world is becoming factionalized. If you are a country not aligned with the US camp, or if you worry your assets might be sanctioned or frozen, you will want an asset not controlled by any single country. China once invested a huge portion of its foreign exchange reserves into US Treasuries, which is increasingly risky in the current international landscape. Bitcoin, as an asset independent of the banking system and sanction regimes, sees its value highlighted even more during conflicts.

06. The “Smart Money” is Actually the Last to Enter

Host: How many people actually hold cryptocurrencies right now? Globally, are there many substantial institutional positions?

Dan Morehead: Still very few. Although 300-400 million people globally hold cryptocurrencies, most are small, “dabbling” positions. However, I believe within a decade, due to smartphone penetration (4 billion users globally), most people will use cryptocurrencies. Its cross-border transfers are fast, almost free, and require no one’s permission.

This might be the first trade in history where the “smart money” is the last to enter. In all the investment opportunities I’ve seen over the past 40 years, typically Wall Street eats first, and retail investors are left holding the bag last. This time it’s completely reversed; individual investors are leading the way. I’ve been on stage with many alternative investment titans managing hundreds of billions of dollars, and many of them know nothing about Bitcoin.

This is why I’m so bullish—this smart, wealthy institutional money will enter one day. Coinbase is already included in the S&P 500 index. If you have no blockchain exposure, you are, in a way, shorting this trend.

07. Policy Shift from Hostile to Tailwind

Host: The new administration’s attitude shift is an important variable this cycle. How do you assess the current policy environment?

Dan Morehead: It’s a massive tailwind. The previous administration took a hostile stance towards blockchain, pursuing Coinbase and cracking down on Ripple. The current administration is willing to build this industry. Although legislative progress is always frustratingly slow, frankly, the fact that the US Congress spends time discussing topics like “stablecoin market structure” itself indicates a qualitative change in the industry’s status.

Regarding stablecoins, this is a revolution unfolding in phases. Currently, stablecoins may not yet pay interest comprehensively, but that’s only a matter of time. Stablecoins are eating into the market share of bank deposits. The current stablecoin market size is about $400 billion, while bank deposits are $17 trillion. (Editor’s note: As of March 2026, the total stablecoin market cap is approximately $300-320 billion, according to sources like DefiLlama, CoinDesk, etc.) Over the next decade, stablecoins are highly likely to take half of bank deposits because they are available 24/7 on mobile phones, offering a far superior experience to traditional banks.

08. Will Strategic Bitcoin Reserves Come?

Host: You’re also watching digital asset treasury companies like MicroStrategy. Do you think governments will establish strategic Bitcoin reserves in the future?

Dan Morehead: I think it’s highly likely to happen. The US already holds a certain amount of digital asset reserves, mostly from law enforcement seizures. And now they are no longer selling these assets; they might even start accumulating more. Countries allied with the US will follow for strategic reasons, and countries opposing the US will buy for defensive purposes. It takes time to move through the political machinery, but the trend is irreversible.

09. Why Solana?

Host: In the Layer 1 competition, why are you particularly bullish on Solana?

Dan Morehead: We hold Bitcoin long-term, but Bitcoin focuses on store of value; it can’t handle tens of thousands of high-frequency transactions per second. Solana was designed from the ground up for high performance—cheaper, faster, suitable for complex application scenarios like gaming and high-frequency trading. The internet has Google and Facebook; the blockchain space will also have a few core Layer 1s. Bitcoin is gold, and Solana might be the digital highway.

10. Nasdaq Down 12%, Bitcoin Down 50%—Is That Reasonable?

Host: The Nasdaq is down 12.5% from its high, while Bitcoin is down 50%. Is this disconnect reasonable?

Dan Morehead: I think it’s very unreasonable. Current stock valuations are at historic highs, with extremely low risk premiums, while interest rates remain high, meaning stocks are very expensive relative to bonds.

The AI sector is also showing signs of overheating, with valuations of many AI companies far exceeding their trend lines.

相比之下， cryptocurrencies are 50% below their long-term trend line. From an asset allocation perspective, cryptocurrencies are now in an extremely attractive oversold zone. Even if the Nasdaq continues to fall in the future, I believe cryptocurrencies will perform better over a two-year span.

11. “I Can’t Find Any Factor That Could Derail This Process”

Host: How is your mindset now different from during the 2014 or 2018 bear markets?

Dan Morehead: Completely different. In the early days, I did have moments of cold sweat, worrying that this whole experiment could be completely destroyed by a hack or regulatory crackdown. But after experiencing the Mt. Gox collapse, multiple 85% drawdowns, and successive rounds of regulatory pressure, the industry not only didn’t collapse but grew stronger. It has reached escape velocity.

Host: Is there any event that would make you completely abandon your bullish view?

Dan Morehead: A few years ago, I had a long list of risks, including custody security, hacking, regulatory uncertainty. But looking back now, most of these risks have been addressed. While no one can guarantee something unexpected won’t happen tomorrow, logically speaking, I can’t find any factor that could completely derail this process. A smartphone-based, global monetary system is an inevitable direction for human society. There are 4 billion mobile phone users globally, and the financial inclusivity brought by blockchain is far more important than sharing photos on social media.

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