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

Original Video Title: Crypto Winter or Buying Opportunity? Dan Morehead’s 4-Year Outlook

Original Video Source: The Master Investor Podcast with Wilfred Frost

Original Text Translation: Plain Blockchain

In this interview, Wilfred Frost had his second in-depth conversation with Dan Morehead, the founder of Pantera Capital. They discussed Bitcoin's positioning in the cycle after a 50% retracement from the peak; how fiat devaluation creates intergenerational wealth conflicts; and why this round of "smart money" is actually the last to enter.

Key Insights Summary

· The majority of institutional investors still have a 0.0% position in blockchain, literally zero.

· It's not gold hitting a new high; it's paper money hitting a historic low.

· This could be the first time in history that "smart money" is the last to enter a trade.

· The average age of first-time homebuyers in the US has shifted from 28 years old to 40 years old.

· We are facing an intergenerational turning point where money and nation are separating.

· Stablecoins are highly likely to take away half of bank deposits within a decade.

· Bitcoin has reached escape velocity, and I can't find any factor that could derail this process.

· If you have no blockchain exposure, to some extent, you are already shorting this trend.

01. "Still the Most Asymmetric Trade in History"

Host: The last time you were here, we delved into the macro logic of cryptocurrency. Your first purchase of Bitcoin was at an amazingly low price, how much 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 referred to Bitcoin as the "most asymmetric trade in history." Do you still hold that view today?

Dan Morehead: Yes, I still believe that. Throughout my entire career, I have been looking for asymmetric opportunities where the upside potential far exceeds the downside risk. Bitcoin, as well as the broader crypto space, is the most asymmetric trade I have ever seen.

Early on, I used to tell people: you could very well lose all your principal, so do not invest more than you can afford to lose. But at the same time, you could potentially see a 5x, 10x, or even a thousand-fold return.

The reason I remain bullish is that we are still in the very early stages. The majority of institutional investors still have 0.0% exposure to blockchain and cryptocurrency. Literally zero. As long as the downside risk remains minuscule relative to the massive global financial asset pool, and the upside is to redefine the entire monetary system, this asymmetry will not disappear.

02. The Four-Year Cycle Has Once Again Played Out

Host: Our last recording was on October 12, and the timing was quite interesting. Around October 6, cryptocurrencies hit a interim high, followed by a pullback. Since then, Bitcoin has dropped by about 50%. As someone who has experienced multiple cycles, how do you interpret this major drop?

Dan Morehead: Anything trying to change the world comes with a lot of hype and volatility. Optimism is rampant at the high, and pessimism at the low. 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 peak we predicted two to three years ago. Based on our model from the previous three cycles, we anticipated that Bitcoin would reach an interim peak around August 2025. While we hoped for a different outcome at that time, like new government policies breaking the cycle, it turned out that the cyclical pattern once again fulfilled itself. The market retraced by 50%. It may sound like a lot, but compared to the previous cycles' drops of up to 85%, this time is actually much milder. The market may need about another year to bottom out, in line with historical patterns.

Host: At that time, you did not appear bearish. Do you think this cycle will ultimately drop by 75% to 80% like before?

Dan Morehead: This is a key question. I indeed did not predict such a steep drop at that time because there were many positive factors then. But the market has its rhythm. What I want to point out is that in prior peaks, the price has significantly deviated from the long-term logarithmic trend line, showing a parabolic rise. For example, in 2013, the price quadrupled in the four months before the peak. However, this time, the price did not exhibit that extreme overheating; it merely retraced to around the 2021 levels.

But I approach this issue from a different perspective: It's not that gold or real estate hit new highs, it's that fiat currency hit historic lows. As the printing press keeps running, the amount of fiat currency needed to buy a fixed quantity of assets inevitably rises. The term "pound" originally represented a pound of pure silver, but now you need to fork over hundreds of bills to get the same weight of silver. Governments can print money limitlessly, and that's the essence of debased currency.

Host: Are we not currently in an astonishing devaluation cycle?

Dan Morehead: Absolutely. The Fed defines "price stability" as 2% annual inflation, which is already absurd. Stability should be zero. Even at just 2% devaluation per year, a person's purchasing power would shrink by nearly 90% over a lifetime. (Editor's note: Under compound interest, with a 2% annual devaluation rate, purchasing power would shrink by about 80% after 80 years.) People are awakening to the fact that they must hold a fixed quantity of hard assets, whether it's stocks, gold, or cryptocurrency.

This debasement also has a clear generational feature. Massive money printing has inflated asset prices, benefiting the older generation who already own property and stocks but squeezing the upward mobility of the younger generation. The average age of first-time homebuyers in the US has been pushed from 28 to 40 years. Unable to accumulate wealth through traditional means, the younger generation turning to cryptocurrency is a very rational choice. If you look at the wage growth and house price growth trend since 1990, you'll find that the wealth gap has reached an absurd level.

05. Decoupling Currency from Nation-States

Host: How does geopolitical conflict change the logic of cryptocurrency?

Dan Morehead: Wars always bring enduring inflation. But more importantly, we are witnessing the "decoupling of currency from nation-states." In ancient times, money was gold, naturally independent of governments. Later, governments monopolized the right to print money, but they have not managed it well.

In the next decade, people will gradually realize that money does not need state backing. Geopolitical conflict is making this trend even clearer — the world is becoming polarized. If you belong to a country not in the American camp, or you fear your assets may be sanctioned or frozen, you will want an asset that is not controlled by any single country. China once poured a large amount of foreign exchange reserves into US Treasuries, a move that carries increasing risks in the current international landscape. Bitcoin, as an asset independent of the banking system and sanction regime, becomes even more prominent in conflicts.

06. The Era of "Smart Money" Enters Last

Host: How many people actually hold cryptocurrency at present? Are institutional large positions in cryptocurrency widespread globally?

Dan Morehead: Still very few. Although there are 3 to 4 billion people globally holding cryptocurrency, most of them hold small amounts more for "fun." However, I believe that in the next decade, due to the widespread adoption of smartphones (4 billion users worldwide), most people will be using cryptocurrency. Its cross-border transfer is quick, almost free, and doesn't require anyone's permission.

This may be the first instance in history where the "smart money" enters the trade last. In the past 40 years, all investment opportunities I have seen usually involved Wall Street feasting first, with retail investors picking up the pieces last. But this time, it's completely the opposite; individual investors are at the forefront. I have shared the stage with many alternative investment giants managing billions of dollars, and many of them are clueless about Bitcoin.

This is why I am so bullish—these smart, wealthy institutional funds will eventually enter the market. Currently, Coinbase has been included in the S&P 500 index. If you have no blockchain exposure, in a way, you are already shorting this trend.

07. Policy Shifts from Hostile to Tailwind

Host: The attitude shift of the new government is a key variable in this cycle. How do you assess the current policy environment?

Dan Morehead: This is a huge tailwind. The previous government took a hostile stance towards blockchain, attacking Coinbase and targeting Ripple. Whereas the current government is willing to build this industry. Although the pace of legislative progress is always frustrating, frankly, for the U.S. Congress to spend time discussing "stablecoin market structure," it itself indicates a significant shift in the industry's status.

Regarding stablecoins, this is a revolution that is unfolding in stages. Currently, stablecoins may not be fully interest-bearing yet, but that's just a matter of time. Stablecoins are encroaching on the bank deposit market. Currently, the scale of stablecoins is about $400 billion, while bank deposits total $17 trillion. (Editor's Note: As of March 2026, the total market value of stablecoins is approximately $300-320 billion, sources: DefiLlama, CoinDesk, and various data platforms.) Over the next decade, stablecoins are highly likely to take away half of bank deposits because they are available 24/7 on your phone, offering a far superior experience to traditional banks.

08. Will There Be a Strategic Bitcoin Reserve?

Host: You are also keeping an eye on digital asset treasuries, such as MicroStrategy. Do you think governments will establish a strategic Bitcoin reserve in the future?

Dan Morehead: I think this is highly likely to happen. The U.S. already holds a certain amount of digital asset reserves, mostly from law enforcement seizures. And now they are not selling these assets anymore, and may even start accumulating more. Countries allied with the U.S. will follow suit for strategic reasons, while countries in opposition to the U.S. will buy as a defensive measure. This will take time to progress through the political machinery, but the trend is irreversible.

09. Why Solana?

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

Dan Morehead: We have been long-term holders of Bitcoin, but Bitcoin focuses on being a store of value and cannot handle high-frequency transactions of tens of thousands per second. Solana was designed for high performance, being cheaper, faster, and suitable for complex use cases like gaming and high-frequency trading. Just as the internet has Google and Facebook, the blockchain space will also have a few core Layer 1 solutions. Bitcoin is like gold, while Solana could be the digital autobahn.

10. NASDAQ Down 12%, Bitcoin Down 50% — Is It Rational?

Host: NASDAQ has retraced 12.5% from its high, while Bitcoin has dropped 50%. Is this disconnect reasonable?

Dan Morehead: I think it's very unreasonable. Currently, stock valuations are at historical highs, with very low risk premiums, and interest rates are still high, meaning stocks are already very expensive relative to bonds.

The AI field has also shown signs of overheating, with the valuations of many AI companies far exceeding the trend line.

On the other hand, cryptocurrency is 50% below its long-term trend line. From an asset allocation perspective, cryptocurrency is now in a very attractive oversold range. Even if the NASDAQ continues to decline in the future, I believe cryptocurrency will outperform over a two-year period.

11. "I can't find any factor that could derail this process"

Host: Now, how are you, compared to yourself during the bear markets of 2014 and 2018, in terms of mindset?

Dan Morehead: Completely different. In the early days, I did have moments of sweating, worrying that this whole experiment would be derailed by a hack or regulatory crackdown. But having gone through the Mt. Gox collapse, multiple 85% retracements, and waves of regulatory pressure, this industry has not only survived but has grown stronger. It has reached escape velocity.

Host: Is there any event that could make you completely give up on being bullish?

Dan Morehead: A few years ago, I made a long risk checklist, including custody security, hacks, regulatory uncertainty. But looking back now, most of these risks have been addressed. While no one can guarantee that an unexpected event won't happen tomorrow, logically, I can't find any factor that could completely derail this process. A smartphone-based, globalized monetary system is the inevitable direction of human society. With 4 billion smartphone users globally, the financial inclusion brought by blockchain is far more important than sharing photos on social media.

Original Video Link