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

Original title: Interview with Pantera’s Founder: Bitcoin Has Reached Escape Velocity, and Traditional Assets Are Being Left Behind

Original author: Pantera Capital

Original source:

Reprint: Mars Finance

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

Highlights

· Most institutional investors’ positions in blockchain are still 0.0%, literally zero.

· It wasn’t gold that made new highs—it was paper money hitting historical lows.

· This could be the first trade in history where “smart money” is the last to enter.

· The average age of first-time homebuyers in the U.S. has shifted from 28 to 40.

· We are facing a generational turning point where money becomes separated from the nation.

· Stablecoins are very likely to take 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 exposure to blockchain, to some extent you’re already shorting this trend.

01, “Still the most asymmetrical trade in history”

Host: The last time you came on, we dug into the macro logic behind crypto. When you first bought Bitcoin, what was the price again—it was shockingly low. How much was it?

Dan Morehead: 65 dollars.

Host: 65 dollars—compared with today’s price around 66,000 dollars, it’s like two different worlds. In that episode, you described Bitcoin as the “most asymmetrical trade in history.” Do you still stand by that view to this day?

Dan Morehead: Yes, I’m still convinced of it. Throughout my entire career, I’ve been looking for those asymmetrical opportunities where the upside potential is far greater than the downside risk. Bitcoin—and the broader crypto space—are the most asymmetrical trades I’ve ever seen.

In the early days, I would tell people: you could very well lose all your principal, so don’t put in money beyond what you can afford to lose. But at the same time, you could earn 5x, 10x, or even a thousand-fold returns.

The reason I’m still bullish is that we’re still in the very early stages. Most institutional investors’ positions in blockchain and crypto are still 0.0%. Literally zero. As long as the downside risk is negligible compared to the massive scale of global financial assets, and the upside is about redefining the entire monetary system, this asymmetry won’t disappear.

02, The four-year cycle has once again played out

Host: We recorded last time on October 12, and the timing was interesting. Around October 6, crypto hit a stage peak, followed by a pullback. Since then, Bitcoin has fallen by about 50%. As someone who has gone through multiple cycles, how do you interpret this drop?

Dan Morehead: Anything trying to change the world comes with a lot of hype and volatility. At the highs, optimism is through the roof; at the lows, it’s full of pessimism. Pantera has been deeply involved in this industry for 13 years and has gone through four complete four-year cycles. These cycles are actually very regular—and even predictable.

When we met in October, we happened to be near the high point we predicted two or three years earlier. Based on models from the first three cycles, we expected Bitcoin to reach a stage peak around August 2025. Even though at the time we hoped this time would produce different results—like a new set of government policies breaking the cycle—looking back, the cycle pattern has once again fulfilled itself. The market fell 50%. That sounds like a lot, but compared with previous cycles’ 85% drawdowns, this time has been relatively mild. The market may still need about another year to build a bottom, consistent with past patterns.

Host: At that time, you didn’t show a bearish stance. Do you think this cycle ultimately drops like the previous ones—down 75% to 80%?

Dan Morehead: That’s a key question. I definitely didn’t predict it would fall that much, because at the time there were many positive factors. But the market has its own rhythm. What I want to point out is that in previous cycle peaks, the price deviated far from the long-term logarithmic trend line, showing a crazy parabolic move. For example, in 2013, in the four months before the peak, the price went up 10x. This time, though, the price didn’t show that kind of extreme overheating—it only roughly returned to the level of 2021.

So I think current prices are roughly the bottom-range. Even if it may still take another six to eight months to build a bottom, if you have a four- to five-year investment horizon, this is a very compelling position.

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

Dan Morehead: I’m not good at that technical analysis stuff. We never try to time trades in the ultra-short term. The way we manage capital is more like venture investing—the perspective is 5 years, 10 years, even 20 years. From that viewpoint, prices are already quite cheap now.

03, Why is Bitcoin always the first one to get smashed?

Host: Why is Bitcoin always the “scapegoat” among risk assets? When the Nasdaq and the S&P 500 top out, crypto is often the first to be sold off. Will this situation last forever?

Dan Morehead: That’s a very sharp observation. Think about it: if a major shock happens outside Monday-to-Friday trading hours, you can’t sell stocks. But crypto is the only highly liquid market in the world with a scale of two trillion dollars and open 24 hours a day, year-round.

When a geopolitical crisis breaks out, institutions want to reduce risk exposure immediately—and Bitcoin becomes the only asset they can liquidate in real time. This causes it to absorb too much selling pressure in the short term. But note that while correlation spikes during a “flash crash,” in the long run Bitcoin’s correlation with the S&P 500 is actually very low—around 0.1 to 0.2. On a multi-year basis, crypto moves independently to the upside, while traditional assets may just be stuck in place.

04, Not gold hitting new highs—fiat is setting historical lows

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

Dan Morehead: Gold is an interesting “old-school” asset. It periodically returns to the public’s attention. Before 2025, gold ETFs were actually seeing net outflows for consecutive years, and the money was flowing into Bitcoin ETFs instead. But by 2025, people suddenly realized that the dollar was accelerating its devaluation—this sense of urgency caused funds to flood back into gold.

But my way of thinking about this is a bit different: it’s not that gold or real estate are making new highs—it’s that paper money is making historical lows. As the printing press keeps running, the number of paper bills needed to buy a fixed quantity of assets must keep rising. The word “pound” originally referred to a pound of pure silver; now you need several hundred banknotes to buy the same weight of silver. Governments can print money without limit—that’s the core of the depreciation trade.

Host: Aren’t we in an astonishing depreciation cycle right now?

Dan Morehead: Absolutely. The Federal Reserve defines “price stability” as 2% depreciation per year—which in itself is ridiculous. Stability should be zero. Even if it only depreciates 2% per year, a person’s purchasing power over a lifetime shrinks by nearly 90%. (Editor’s note: using compounding, at a 2% annual depreciation rate, purchasing power drops by about 80% after 80 years.) I think people are waking up—realizing they need to hold fixed quantities of hard assets, whether those are stocks, gold, or crypto.

This depreciation trade also has a clear generational characteristic. Large-scale money printing inflates asset prices. That benefits older generations who already own property and stocks, but it squeezes the upward space available to younger people. The average age of first-time homebuyers in the U.S. has moved from 28 to 40. Since wealth can’t be accumulated through traditional paths anymore, it’s a very rational choice for the younger generation to turn to cryptocurrencies. If you look at the wage growth and home price growth curves since 1990, you’ll find this “scissor gap” has become absurdly large.

05, Separation of money from the nation

Host: How do geopolitical conflicts change the logic of crypto?

Dan Morehead: War always brings persistent inflation. But more importantly, we’re seeing the “separation of money from the nation.” In ancient times, money was gold, and it was naturally independent of the government. Later, governments monopolized the power to print money, but it turns out they haven’t managed it very well.

Over the next decade, people will gradually realize that money doesn’t need government endorsement. Geopolitical conflicts make this trend even clearer— the world is fragmenting into blocs. If you’re a country that doesn’t belong to the U.S. bloc, or if you worry your assets could be sanctioned or frozen, you’ll want an asset that isn’t controlled by any single country. China once put a large share of its foreign exchange reserves into U.S. Treasuries—under today’s international landscape, the risk is getting bigger and bigger. As an asset independent of the banking system and sanctions regime, Bitcoin’s value becomes more pronounced in times of conflict.

06, “Smart money” ended up being last to enter

Host: Right now, how many people actually hold crypto? Are there truly big institutional positions worldwide?

Dan Morehead: Still very few. Although there are three or four hundred million people globally who hold crypto, most of them have small “for fun” positions. But I think within ten years, because of the widespread adoption of smartphones (4 billion users globally), most people will use cryptocurrencies. Cross-border transfers are fast and almost free, and they don’t require anyone’s permission.

This could be the first trade in history where “smart money” is the last to enter. In all the investment opportunities I’ve seen over the past 40 years, it’s usually Wall Street that eats first and retail investors that end up holding the bag last. This time is completely the opposite—individual investors are out front. I’ve shared the stage with many alternative investment titans managing hundreds of billions of dollars, and many of them are completely clueless about Bitcoin.

That’s why I’m so bullish—those smart, well-funded institutional flows will eventually come in. Right now, Coinbase has already been included in the S&P 500 index. If you have no exposure to blockchain, to some extent you’re already shorting this trend.

07, Policy shifts from hostile to tailwind

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

Dan Morehead: This is a huge tailwind. The previous administration took a hostile stance toward blockchain—going after Coinbase and targeting Ripple. But now the government is willing to build this industry. Although the pace of legislative progress always makes people impatient, the truth is that Congress spending time discussing “stablecoin market structure” is itself evidence that the industry’s status has undergone a fundamental change.

When it comes to stablecoins, this is a revolution being rolled out in phases. Stablecoins might not fully pay interest yet, but that’s just a matter of time. Stablecoins are already eating into the market for bank deposits. Stablecoin size is currently about $400 billion, while bank deposits are $17 trillion. (Editor’s note: as of March 2026, the total market cap of stablecoins is about $300–320 billion, sources include DefiLlama, CoinDesk, and other data platforms.) Over the next decade, stablecoins are very likely to take half of bank deposits, because they’re available on your phone 24 hours a day and the user experience is far better than traditional banks.

08, Will strategic Bitcoin reserves happen?

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 extremely likely. The U.S. already has some scale of digital asset reserves, mostly from enforcement seizures. And now they’re not selling these assets anymore— they may even start accumulating. Countries allied with the U.S. would follow for strategic reasons, and countries opposing the U.S. would buy for defensive purposes. This requires time to work through the political machine, but the trend is irreversible.

09, Why Solana?

Host: In the competition between Layer 1 networks, why are you especially bullish on Solana?

Dan Morehead: We hold Bitcoin long term, but Bitcoin is focused on storing value—it can’t handle tens of thousands of high-frequency transactions per second. Solana was designed from the start for high performance—cheaper, faster—making it suitable for complex application scenarios like gaming and high-frequency trading. Just like the internet has Google and Facebook, in the blockchain space there are also several core Layer 1 networks. Bitcoin is like gold, and Solana could be the digital highway.

10, Nasdaq down 12%, Bitcoin down 50%—is that reasonable?

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

Dan Morehead: I think it’s completely unreasonable. Stock valuations are at historical highs right now, and the risk premium is extremely low, while interest rates are still high—meaning stocks are already very expensive relative to bonds.

There are also signs of overheating in the AI sector, and many AI companies’ valuations have already far exceeded the trend line.

Meanwhile, crypto is 50% below the long-term trend line. From an asset allocation perspective, crypto is now in an extremely attractive oversold range. Even if the Nasdaq continues to fall, I still think crypto 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 different now compared with the you during the bear markets of 2014 and 2018?

Dan Morehead: Completely different. In the early days, I really did have moments when I broke into cold sweats, worried that this whole experiment could be completely wiped out by a hack or regulatory crackdown. But after going through the collapse of Mt. Gox, multiple 85% drawdowns, and regulatory rounds of suppression, the industry didn’t die—it only got stronger. It has already reached escape velocity.

Host: Is there any event that would make you abandon your bullish stance entirely?

Dan Morehead: A few years ago I made a very long list of risks, including custody security, hacker attacks, and regulatory uncertainty. But looking back now, most of those risks have already been resolved. No one can guarantee that something unexpected won’t happen tomorrow, but logically, I can’t find any factor that would completely derail this process. A smartphone-based, globalized monetary system is an inevitable direction for human society. With 4 billion smartphone users worldwide, the financial inclusion brought by blockchain matters far more than sharing photos on social media.

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