Compiled by TechFlow

Guest: Dan Morehead, Founder of Pantera Capital

Host: Jason

Podcast source: Empire

Phase II of the Bull Market | Dan Morehead

Air Date: September 22, 2025

Summary of key points

This week, Dan Morehead joins us on the show to share his perspectives on current market conditions and his outlook for cryptocurrency trends in 2025-2026. We delve into Dan's journey into 2013, exploring how he built his confidence in cryptocurrency as an asset class, whether the four-year cycle still applies, financial tools in the cryptocurrency space, Dan's investment thesis on Solana, and more. Listen in!

Summary of highlights

• We have been selling Bitcoin and investing in other projects. Our investors have received good returns. We still hold approximately $1 billion worth of Bitcoin.
• Bitcoin isn’t strongly correlated with traditional risk assets, and we’re in the midst of a multi-decade bull market in cryptocurrencies.
• Bitcoin is not a bubble. Most people haven’t really gotten involved in this field yet. We are still in the early stages of the industry’s development.
• Many smaller cryptocurrencies have not performed as expected. The current market focus remains on the three major cryptocurrencies: Bitcoin, Ethereum, and Solana.
• Not only should the Federal Reserve not cut interest rates, it should even raise them further.
• It's not impossible for the US dollar to be replaced. This process will likely take 10 to 20 years, not just a short period of time. Over the next decade, some countries will gradually incorporate Bitcoin into their reserve assets.
• The higher the interest rate, the more expensive it is for the government to borrow money. The only way to hedge against future risks is to invest in hard assets like Bitcoin.
• In the blockchain sector, Pantera's investment success rate has reached 86%, and 25 of its portfolio companies have become unicorns.
• The cycles have been very consistent in the past, with a two-year bull market and a two-year bear market. Therefore, we usually recommend that founders ensure that they have two years of funds in reserve to weather the bear market.
• There is a huge public market demand for publicly listed assets in the cryptocurrency space. The returns on Bitcoin and this generation of crypto assets have been phenomenal and few other assets can match them.
• Solana DATS, even with mediocre performance and trading close to par, can still offer a yield of around 7% through staking, which is far more attractive than traditional ETFs.
• Our current investment in Solana has reached $1.3 billion. Solana's market capitalization is currently only 5% of Bitcoin's, but in the long term, we believe it has the potential to surpass Bitcoin.
• Age is not the only factor that determines success. What really matters is the founder's ability and in-depth understanding of the industry.

Sharing experience of early investment in Bitcoin

Jason:

I've heard a lot of different stories about you suggesting Mike buy his first Bitcoin, or him suggesting you, or someone asking Lubin to participate in their first investment. Can you tell me what the original story was?

Dan:

I first encountered Bitcoin through Peter Berger, who asked if I'd like to talk about it. I'd actually heard about Bitcoin as early as 2011, when my brother John introduced it to me. At the time, Gavin Andresen had developed a website called "bitcoin-faucet" where users could receive free Bitcoin. At the time, Bitcoin was barely known; you just had to log in to the website to receive it. I was very interested in libertarian ideas, so I thought the content was cool and hoped it would succeed, but I didn't take any real action. Later, I had coffee with Pete, Mike, and several of their colleagues, and the conversation lasted a full five hours. I was struck by the concept of Bitcoin; it was the coolest thing I'd ever seen. They even gave me a space in their office to focus on researching the field. From that day on, March 12, 2013, I was completely immersed in the world of cryptocurrency, and I never considered other investment options.

Jason:

I found an email you wrote in July 2013 in which you wrote: "The predicted Bitcoin correction has quickly occurred. Bitcoin is now trading at $65, exactly half of its price at our first meeting. I think we should buy aggressively now. I will be buying 30,000 Bitcoins this weekend with my own funds. The fund will have the option to participate in this purchase, I just want to be involved." Dan, can you tell us what happened at the time?

Dan:

At the time, everyone thought I was crazy. No one wanted to invest. I sent that email, but almost no one responded. Before that, I had a very traditional career, working at hedge funds and Tiger Management. Everything was very stable and predictable. So, suddenly switching to a seemingly sci-fi technology project was really confusing to many people. When I sent the email, the response was lukewarm; no one wanted to invest. So I decided to buy Bitcoin myself. At the time, the market was very small and liquidity was very low. We had originally planned to launch this project as a Fortress brand, but the board of directors rejected it at the last minute. So we had to set up segregated accounts and funds because the preparations were already complete.

Finally, I wired funds to two exchanges to start buying Bitcoin. One was Bitstamp in Slovenia, and the other was Coinbase, a startup with only one employee. When I tried to buy, the system showed that my trading limit was $50. I worked on Wall Street at the time, and limits were often in the millions, not just $50. So I emailed them, asking for a higher limit. "I just wired $2 million, please adjust my limit," I said. Four days later, their sole employee, Olaf, replied, "Okay, the limit is now $300." At that limit, I could only trade $300 per day, which would take seven years to complete!

Jason:

I think many people, especially those who entered the industry in 2020, such as those who experienced the DeFi summer of 2020, may not know how the early cryptocurrency industry built infrastructure step by step, such as custody services, exchanges, etc.

Dan:

Yes, the early days were certainly chaotic. I remember we owned 2% of the world's Bitcoin. There were no professional custodians back then, Coinbase hadn't even been established yet, and the largest custodian was Mt. Gox. So I had to memorize the private keys for a lot of Bitcoin myself.

However, we have been selling Bitcoin and investing in other projects. Our investors have received good returns. We still hold approximately $1 billion worth of Bitcoin.

Dan's macroeconomic forecast for 2025

Jason:

Before I delve into Pantera Funds and investments, I want to talk about macroeconomics. You discussed macroeconomics and Federal Reserve policy with my co-founders, Mike and Dan Tapiero, at Permissionless 2024. At that time, you mentioned concerns about the Fed, particularly in December 2021, when you predicted that interest rates would rise from zero to 5% and remain there for an extended period.

The Federal Reserve has just started cutting interest rates. What are your thoughts on the current macroeconomic landscape? How does Bitcoin look in 2025 compared to 2013, when you invested heavily in it?

Dan:

Regarding the Federal Reserve, I remember that in December 2021, the federal funds rate was zero, the 10-year Treasury yield was only 1.3%, and the inflation rate was as high as 8%, but this makes no sense to me at all.

Therefore, since 2013, my only trade, besides investing in cryptocurrencies, has been shorting. Back then, I predicted that both the Fed funds rate and the 10-year Treasury yield would rise to 5% (possibly due to a price decline in the bond market) and that they would remain at that level for a long time. It seems I still believe these rates should remain elevated.

With inflation currently at 3% and unemployment at historic lows, it would be highly unwise for the Federal Reserve to cut interest rates. In fact, 3% inflation means a 90% devaluation of money over a person's lifetime, which is devastating for the economy. Therefore , I believe the Fed should not only avoid cutting interest rates but should actually raise them further. Inflation has a significant impact on housing prices, particularly affecting younger generations. To stabilize the economy, the Fed should maintain high interest rates.

Jason:

Speaking of housing, I've heard you mention that the Fed's injection of trillions of dollars into the mortgage market was one of the biggest policy blunders in history. How do you think we can address this?

Dan:

Frankly, the Fed's purchase of $9 trillion in mortgages was a major mistake. They artificially kept mortgage rates down to 2.5%. This low interest rate environment practically forced people to buy homes, as the cost of purchasing a home was significantly reduced, making it very attractive. As a result, many people did choose to buy homes during this period. Mortgage issuance increased by 200% in 2020 and 2021. This policy inflated the Fed's balance sheet and also drove up national housing prices by as much as 40%. This was deeply unfair to younger generations, especially the 35% of Americans who do not yet own a home. This is one reason why cryptocurrency has become so popular among young people—not just as an investment, but also as a tool to combat these policy mistakes. Furthermore, the US government is operating a $2 trillion annual budget deficit, an overly loose fiscal policy that further exacerbates economic instability.

Jason:

Do you think we can get out of this mess? America's interest payments now exceed its military spending.

Dan:

Honestly, I'm not sure how to solve this problem. It creates a vicious cycle: the higher the interest rate, the more expensive it becomes for the government to borrow. I think the only way to solve this problem is to invest in hard assets like Bitcoin to hedge against future risks.

Jason:

What are your thoughts on the potential for Bitcoin to become a global reserve currency? While Bitcoin has established itself as an asset class, the US dollar remains the world's primary currency. Where do you see Bitcoin falling on this spectrum?

Dan:

History shows that the global reserve currency changes every 80 to 100 years. This has been the case from the Portuguese godo to the British pound to the US dollar. So it's not impossible for the dollar to be replaced. I think this process will likely take 10 to 20 years, not any time soon.

But we're already seeing some signs, like the US and the state of Wyoming starting to build strategic Bitcoin reserves, and the UAE and other Gulf states considering similar initiatives. This is especially true for countries with close ties to the US, whose currencies are often pegged to the dollar. Countries like China and Russia may gradually shift some of their reserves into Bitcoin, recognizing the risks of holding large amounts of US Treasury bonds. For example, China holds $1 trillion in US Treasury bonds, and the US could effectively cancel this debt at any time, posing a significant threat to China. Therefore, I believe that over the next decade, some countries will gradually incorporate Bitcoin into their reserve assets.

Jason:

I think this process could be even faster. Looking at the gold market, central banks are driving the gold rush. If this trend shifts to digital, how do you think the macroeconomic landscape will change in the coming months?

Dan:

I believe risks in bond and currency markets remain elevated due to persistently high inflation and overly loose fiscal policy. The US dollar, while still strong, has begun to weaken. Furthermore, events like the Terra incident have impacted confidence in the dollar. As a reserve currency, the dollar requires stability and predictability, and the more such events occur, the more people will seek alternatives, such as gold and Bitcoin.

Does the four-year cycle still apply?

Jason:

What are your thoughts on the halving and the four-year cycle, and the relationship between Bitcoin and traditional risk assets? Over the past decade, there has been a certain correlation between Bitcoin and risk assets. Do you think this will change?

Dan:

I believe Bitcoin's correlation with traditional risky assets is not strong. Over the past 13 years of Bitcoin investment management, Bitcoin, a representative of the cryptocurrency industry, has had a correlation of only 0.17 with the S&P 500. This indicates a very low correlation between Bitcoin and traditional risky assets. However, in 2022, there was a period when Bitcoin's correlation spiked to 0.76, an extremely rare phenomenon. This was due to a significant amount of overleverage in the market, with liquidations occurring simultaneously at many hedge funds, as well as platforms like Celsius, BlockFi, and FTX. This was also related to a phenomenon similar to "tech stock investing," such as Ark Investments holding assets like Bitcoin and Tesla, which led to high correlations between them in the short term. However, this situation has largely disappeared, and Bitcoin has now returned to its low correlation with risky assets.

I believe we're in a multi-decade bull market for cryptocurrencies, albeit with periodic fluctuations. For example, if the S&P 500 plummeted 30% tomorrow, Bitcoin probably wouldn't rise. So in the short term, Bitcoin is indeed affected by traditional markets, but in the long term, they're not directly correlated. The high correlation between many risky assets isn't because they're inherently linked, but rather because investors' asset allocations are converging. When I first started trading bonds in the 1980s, the bond market was a separate realm, and I didn't care about the performance of stocks or other assets. But with the success of modern portfolio theory, investors' asset allocations have gradually converged, leading to increased correlations between assets.

Interestingly, most institutional investors currently have a zero weighting for cryptocurrencies and blockchain investments. This means that cryptocurrencies have not yet entered the asset allocation of mainstream institutional investors, which is why they have a low correlation with traditional risk assets.

Jason:

What about the four-year supply shock cycle? Your team has published excellent market analysis letters for many years, and I noticed that you still use traditional indicators such as the four-year cycle and halving in your analysis, and these predictions have indeed come true. What are your thoughts on the concept of a four-year cycle?

Dan:

I'm a big believer in four-year cycles. We've experienced three halvings in this industry, and each one has followed a very predictable pattern. I remember a professor in college who wrote a book called "A Random Walk Down Wall Street," which argued that markets are efficient. But Warren Buffett once said that markets are usually efficient, but the difference between "usually" and "always" is worth $80 billion to him.

While everyone knows the halving will occur on a certain date, when it actually happens, the number of Bitcoins miners sell daily will be cut in half. If demand remains stable and supply decreases, the price will naturally rise. During the first halving, we studied the total number of Bitcoins in existence and the impact of the halving on issuance. The impact was significant, equivalent to a 15% supply reduction, given that there were only about 12 million Bitcoins in circulation at the time. Over time, the impact of each halving will gradually diminish as the total number of Bitcoins in circulation increases, reducing the proportion of new supply each halving reduces. By 2035 or 2040, the impact of a halving could be only 35-40% of the previous one. For example, a few years ago, when the Bitcoin price was around $17,000, we recalculated the halving data and predicted that Bitcoin would reach $118,542 on August 11, 2025. It actually reached $118,542, just one day early, on August 10. I really like this result because it perfectly matches our prediction. So, I truly believe in the four-year cycle.

Jason:

In case anyone hasn't been following, you guys predicted in November 2022 that Bitcoin would hit $117,482 on August 11, 2025, and it missed by just one day?

Dan:

Yes, it did on August 10th. So I do believe in four-year cycles. But it's important to note that each cycle has only 35% to 40% of the impact of the previous one. Therefore, the next cycle will be more gradual. In another 20 years, there will probably be only minor fluctuations.

Jason:

According to cycle theory, the top was in December 2017, and the next peak was in November 2021. Some are now saying the market appears overheated, driven by aggressive regulation, a bit like the ICO bubble. Do you think this is the end of the four-year cycle?

Dan:

An investor once praised us for accurately predicting the price point, but asked if that meant prices would start falling today. Based on past cycles, this could indeed be a peak, followed by a roughly two-year bear market. However, the most dangerous phrase in investing is "this time is different." However, I do believe that significant changes in the US regulatory environment could make the cycle last longer, perhaps six months to a year. Therefore, I do believe that US regulatory changes could extend this cycle.

Jason:

What do you think the next bear market will look like? Many founders may be concerned about this, such as when to de-risk their business, implement a hiring freeze, or how to manage their business during a bear market. What do you think about the intensity of the next bear market?

Dan:

Past cycles have been very consistent, always consisting of a two-year bull market and a two-year bear market. Therefore, we typically advise founders to ensure they have two years of reserves in their accounts to weather bear markets. As more people invest in cryptocurrencies, market fluctuations will become more gradual. Early rallies, such as the one in 2013, saw a staggering 10x increase in three to six months. But then the market plummeted 85%, a phenomenon we've seen three times. My prediction was that the next bear market wouldn't be as severe, but I said that last time, and it happened anyway.

Jason:

The 2022 bear market wasn't an 85% drop, was it?

Dan:

Yes, while Bitcoin's drop from $70,000 to $15,000 was significant, our market is always full of hype, and people start to believe the hype. Former CFTC Chairman Christopher Giancarlo reminded me that the 2017 peak was the day the futures were launched. Then the market began to decline, ultimately falling 85%. The 2021 peak was the day Coinbase went public. After the listing, the market began to decline, ultimately falling 85%.

Jason:

What do you think is the “Coinbase IPO moment” of this cycle?

Dan:

That's a good question. Coinbase's IPO didn't bring any new capital into the market; it simply went from a private company to a public company. That's different now. Numerous IPOs and bonds have indeed injected capital into the cryptocurrency space, providing a permanent boost. Therefore, I remain bullish on the market over the next six to twelve months. We're trying to be honest and look for signs of a market peak, but we haven't seen any yet. Furthermore, you mentioned that bonds could be like ICOs. I think we're still in the early stages of the bond concept, and the market still has a long way to go.

Jason:

By the way, I don't actually think of bonds as being like ICOs. I just think they're a buzzword in this cycle. As someone who's bet practically their entire career on crypto, how do you react to signs of a bubble? Let's say, in July 2026, you see signs of a bubble. How do you adjust your position? Even if you don't want to sell your Bitcoin, you might feel the market is overheated. How do you balance these two conflicting ideas?

Dan:

We've always tried to capitalize on these cycles, returning capital to our limited partners (LPs) when the time is right. In our venture capital fund, we can choose when to sell assets and return capital. Therefore, our current view is that over the next six to twelve months, we will reduce risk at the peak of the cycle and return capital to LPs. This is a good goal, but it's easier said than done.

The second phase of the bull market: opportunities and challenges

Jason:

You recently published an article discussing the second phase of a bull market cycle. The article highlights the widely held view that Bitcoin typically leads the market in the early stages of a bull market, followed by a gradual rotation into other major cryptocurrencies. We've already seen capital flow from Bitcoin to Ethereum, and now Solana is taking center stage. In your opinion, what characteristics will the second phase of this bull market present?

Dan:

Historically, Bitcoin tends to dominate the first half of a bull market, with other currencies gradually catching up in the later stages. As you mentioned, Bitcoin's market share reached a peak about 6 to 8 weeks ago, followed by a significant increase in Ethereum, and now it's Solana's turn to shine.

However, I was somewhat surprised that many smaller cryptocurrencies didn't perform as expected. In theory, the SEC's policy adjustments should be more favorable to non-Bitcoin assets. After all, in the previous regulatory environment, Bitcoin was considered a "safe haven," while cryptocurrencies like XRP faced strict SEC scrutiny. Therefore, I expected these smaller cryptocurrencies to perform better after the policy changes. However, in reality, the current market focus remains on the three major cryptocurrencies: Bitcoin, Ethereum, and Solana.

Jason:

I remember Arca's Jeff Dorman doing a categorized analysis of this year's market performance. He mentioned that the assets that have performed well this year fall into several categories: first, tokens backed by ETFs (exchange-traded funds) or bonds , such as Bitcoin, Ethereum, and Solana; second, cryptocurrency-related stocks , such as Circle, Galaxy, and Coinbase; third, currencies with close ties to the US government , such as XRP and LINK; and finally, companies with strong profitability that return profits to token holders, such as Hyperliquid and Pump. In addition, mainstream currencies also performed well. He also mentioned that the market's differentiation is more pronounced than ever before.

Dan:

That's a very important point you make. The assets that are currently outperforming the market are those with publicly traded channels, such as ETF-backed tokens or publicly traded companies like Figure and Circle. This suggests that tradability in public markets is becoming a key factor driving the value of these assets.

The cryptocurrency IPO window is open

Jason:

Let's talk about the public markets. There are two main topics here: bonds and cryptocurrency IPOs. I'm curious about your perspective. Lately, it seems like any company that can go public is attracting a lot of investment. What are your thoughts on this phenomenon?

Dan:

My understanding is that many companies have been preparing for IPOs for the past few years, but for various reasons, they were stuck in the pipeline. Now they're finally starting to come together. For example, Circle attempted to go public a few years ago and finally succeeded this year. Figure and companies like Bitgo are also expected to go public soon. I believe there's a huge public market demand for publicly listed assets in the cryptocurrency sector. Bitcoin and this generation of cryptocurrencies have delivered astonishing returns, unmatched by almost any other asset class. And now, investors are finally able to purchase these assets on the public market. I think having cryptocurrency companies included in the S&P 500 is a very significant milestone. Index investors (whose holdings number in the trillions of dollars) now have to have a position in crypto. If you use the S&P 500 as a benchmark, you need to have a clear investment strategy for cryptocurrency-related companies. This trend is forcing investors to make choices and participate in this space.

Jason:

What other companies might go public? I know you've already had four successful IPOs. I'm trying to recall, Circle, Figure, Amber, and maybe one I'm forgetting, but at least these three have already gone public. What are your thoughts on the companies that might go public next?

Dan:

I think this is a positive sign for the industry as a whole. Clearly, there's a strong demand for publicly listed cryptocurrency companies right now. So I hope all of the companies you mentioned can successfully go public, which I think would be very beneficial for the industry. Ripple Labs, for example, is another possible candidate. While it's difficult to predict who will go public, I believe most of the companies you mentioned are likely to do so within the next 12 months.

Analysis of Financial Management Tools for Cryptocurrency

Jason:

As always, investing in blockchain technology carries risks. Speaking of DATs (Digital Asset Treasuries), you are probably one of the institutions that manage the most DATs capital globally.

Dan:

We currently manage approximately $1 billion in DATS capital. This summer, we launched a dedicated DATS fund and entered the market with two DATS projects. One is Helius, which is Solana's DATS, and the name of the other project is unknown to me.

Jason:

It sounds like you're very bullish on these DATS projects. Could you share your investment rationale?

Dan:

It's all about creating opportunities for investors. Back in 2013, we offered investors their first exposure to Bitcoin, as acquiring and storing Bitcoin was very difficult at the time. The emergence of DATS is the next evolution of this investment opportunity. Previously, our fund required a minimum investment of $1 million, and most investors needed to meet the SEC's accredited investor standards, which was prohibitive for many. DATS lowers the barrier to entry, making it accessible to anyone with a brokerage account.

Our average DATS transaction size is $1,000, 1,000 times smaller than the average investment in traditional fund investors. This approach allows more people to enter the market, truly achieving financial inclusion. More importantly, DATS can increase the number of tokens per share. For example, Bitcoin saw a 76% increase in the number of tokens per share last year and approximately 30% this year. Even in a worst-case scenario, DATS can provide returns similar to ETFs. For example, even with mediocre performance and trading near par value, the Solana DATS can still provide a yield of approximately 7% through staking, making it far more attractive than traditional ETFs.

Jason:

We spoke with Kyle Simone a few days ago about their plan to reinvest capital into the on-chain ecosystem. Their approach is to arbitrage the interest rate differential between on-chain and off-chain, for example, borrowing from a bank at 6% or 7% and then transferring it to Solana to earn a 14% yield, resulting in a net profit of around 7%. What are your thoughts on this type of arbitrage? Have you considered moving capital on-chain?

Dan:

From our perspective, our advantage lies in our ability to acquire Solana tokens at a discount to the spot market price, for example, by trading through large blockholders who lock up blocks. This strategy was used successfully in the early stages of our Bitcoin Fund. Back then, our Bitcoin Fund even outperformed Bitcoin itself because we were able to purchase large amounts of the asset at a discount. At the time, companies like Expedia had nowhere to sell their Bitcoin, and no exchanges existed, so we seized the opportunity to buy at a low price. We now hope to add value to Helius DATS through a similar approach, purchasing tokens at a discount to the spot market price. If we can time our trades effectively, we can attract even more capital, creating a virtuous cycle.

Jason:

So is Helius the first DATS project you've released?

Dan:

Yes, we take this project very seriously. We've spent several months executing on it. If we identify similar opportunities in another ecosystem in the next four or five months, we would consider launching a new DATS, but nothing has been confirmed yet.

Jason:

Have you ever considered tokenizing your fund?

Dan:

It's certainly been suggested, but I'm very cautious about it. Our products are essentially securities, and tokenizing them would raise regulatory issues with the SEC. While I'm optimistic about blockchain technology, not everything needs to be tokenized. I don't believe tokenized funds offer many advantages. In comparison, the DATS design is very simple and straightforward, better meeting market needs. As for complex fund tokenization, it may become possible someday, but it's unlikely to happen in the near future.

Solana Investment Thesis: Why Pantera Invested Over $1 Billion in Solana

Jason:

I’d love to hear your investment thesis on Solana.

Dan:

Solana's performance across multiple key metrics, such as daily active users and platform revenue, demonstrates its exceptional practicality, widespread adoption across a wide range of commercial transactions, and exceptionally high transaction throughput. In comparison, some older blockchain technologies can only process a handful of transactions per second and require Layer 2 and other complex solutions to improve performance. Over the past year, our confidence in Solana has grown, and it has now become the largest investment in our portfolio. We have already invested $1.3 billion in Solana, driven by our belief in its enormous potential.

Jason:

So how does this compare to investing in Bitcoin and Ethereum? I'm curious.

Dan:

We've invested roughly the same amount in Solana as we have in Bitcoin, with a relatively small investment in Ethereum. We're very bullish on Solana's future. Frankly, Solana's market cap is only 5% of Bitcoin's right now, but we believe it has the potential to surpass Bitcoin in the long term.

Jason:

Is this based on how you think institutional investors will view Solana? Or is it based on which platform you think developers will choose to build on? How did you develop this investment thesis?

Dan:

These factors all influenced our decision. The number of developers is a crucial metric. We've observed that despite Solana's later start, its developer base has been growing rapidly each year, even exceeding Ethereum's growth rate. Furthermore, while many people already invest in Bitcoin through ETFs and other methods, relatively little attention has been paid to Solana. Therefore, we believe that providing investors with access to Solana and demonstrating its investment potential will attract more participation. Over time, Solana is likely to surpass Bitcoin.

Are institutions still underinvested in cryptocurrencies?

Jason:

Do you think institutional investors are still underinvesting in cryptocurrencies?

Dan:

In the early days, many investors had limited knowledge of cryptocurrencies and would ask very basic questions, such as "Why is the total number of Bitcoins 21 million?" or "How can we be sure that there are really only 21 million?" But now the situation is very different. Investors have a deeper understanding of this field and the questions they ask are more professional and detailed.

Jason:

So why are there still so many institutions that have no investment in cryptocurrencies? Now that the regulatory environment has improved and publicly traded crypto companies have emerged in the market, why are so many people still not involved in this field?

Dan:

I believe this is related to a series of events in 2022. At the time, several large public pension funds and sovereign wealth funds announced cryptocurrency investments. Unfortunately, many of them chose the wrong projects, such as FTX and Luna, which subsequently collapsed. These high-profile failed investments made many institutions wary of cryptocurrency. Furthermore, the SEC's lawsuits against Coinbase and Ripple Labs also unnerved investors. Between 2021 and 2022, the market experienced a number of negative events, which made the outlook for cryptocurrency look less optimistic.

However, I believe things will improve in the future. The election results for the White House and Congress will likely influence support for cryptocurrencies. If policies become more welcoming, it will unlock more investment opportunities. I believe that over the next few years, most institutions will gradually enter the cryptocurrency space. For example, even the most bullish endowment funds currently have less than 2% of their funds allocated to the sector. I believe this proportion could eventually increase to 8%. Starting from zero is indeed a significant breakthrough, but we will need to see gradual growth from 1% to 2%, and then to 4%. This is why I am so confident in the future of cryptocurrencies, as there is still a lot of room for development.

Jason:

What do you think will be the main entry point for institutional investment? Is it a Bitcoin ETF or other investment vehicles?

Dan:

I think there will be multiple ways to access it. In the early days, even buying Bitcoin was very difficult, so they usually invested through funds like ours. But now, as you said, we have a lot of excellent firms managing funds in this space, as well as publicly listed companies like Coinbase and Circle, and other public companies that offer digital asset investments, which provides investors with a wider range of investment channels.

The story of creating the longest-running fund in crypto

Jason:

Let's talk about Pantera Fund. As the longest-running fund in the cryptocurrency space, what makes you unique? Can you share some details about your company's size and team?

Dan:

Pantera was founded in 2003 after I left Tiger Management. For the first ten years of the firm, we focused primarily on managing macro hedge funds. In 2013, we launched our first cryptocurrency fund and our first venture capital fund. Our first investment was in Ripple Labs, which had a market capitalization of just $17 million at the time.

We remain committed to providing investors with diverse investment opportunities. To date, we have launched four venture capital funds and are currently developing a fifth. In addition, we engage in approximately 10 to 12 other types of investment activities. For example, we have a fund dedicated to investing in private tokens, which are in the pre-public offering stage, formerly known as ICOs. We also provide multiple investment channels for projects like Solana and Worldcoin, helping investors gain greater exposure to the cryptocurrency space. We currently manage $6 billion in assets and have a team of 85 people. A key characteristic of our firm is our focus on generating returns for investors. Through our buy low, sell high strategy, we have generated $6 billion in direct profits for investors and distributed 105,000 bitcoins to limited partners. Overall, we have helped investors earn approximately $60 billion in returns.

Jason:

What is your investment success rate?

Dan:

In the traditional venture capital world, approximately 65% of projects fail. However, in the blockchain field, our investment success rate has reached 86%, which is truly astonishing.

Jason:

How many of the startups you invested in have grown into unicorns?

Dan:

Of the companies we invested in, 25 have become unicorns.

Jason:

This is crazy! Do you see this as an opportunity for generational wealth?

Dan:

I once said on CNBC that Bitcoin isn't a bubble because most people haven't really gotten involved in the space yet. In fact, 67% of institutional investors have no exposure to cryptocurrencies. This means we're still in the early stages of the industry's development. The internet has been around for 52 years, yet new innovations continue to emerge. Similarly, blockchain technology is in its infancy and holds enormous potential for future development. I've always encouraged young people to enter the cryptocurrency space and consider it a career path.

Jason:

Would you consider entering fields like robotics or artificial intelligence?

Dan:

I wouldn't say for sure, but at least for the next 10 years, we will focus on the cryptocurrency field. There are so many opportunities in this field, and we discover many exciting things every day.

Practical advice for entrepreneurs

Jason:

You've invested in 25 unicorns. Can you share some stories about the founders of these companies? For example, one founder recently achieved significant success in managing their board of directors. Could you share their experience? I'm curious about the secrets to these founders' success.

Dan:

We recently spoke about Mike Cagney, founder of Figure. His defining characteristic is his intense focus on execution. His exceptional ability to not only envision the future but also execute on it. In the venture capital world, many founders are visionaries, skilled at painting visions of the future, but I'm particularly impressed by Mike's execution. He proactively asks the board specific questions, such as, "Who do you think would be a good CMO?" If someone offers a suggestion, he immediately follows up to ensure it's implemented. This drive for action has driven sustained progress for the company. I have every confidence in his future. I've known him for 25 years, back when he was a macro hedge fund manager in San Francisco and I was just starting Pantera. He's truly an exceptional founder, able to both see the future and create a plan and motivate his team to achieve it.

Jason:

I've noticed that many successful cryptocurrency founders skew older, like Cagney, Belshi, and Jeremy, who recently went public with Circle. These experienced founders have achieved remarkable success in the industry. Many may think cryptocurrency is a young industry, but in reality, older founders seem to be more likely to succeed. What are your thoughts on future entrepreneurs in the cryptocurrency space? What kind of founders should we support?

Dan:

This is an interesting question. We can analyze the 25 unicorn companies we've invested in and look at the average age of their founders and other relevant data. The successful founders you mentioned do have extensive experience. But there are also some very young entrepreneurs, perhaps only in their twenties. It's important to note that the cryptocurrency industry has been developing for 12 years, and even young founders have accumulated considerable experience. Therefore, age is not the only factor determining success; what truly matters is the founder's ability and in-depth understanding of the industry.

The biggest opportunities in cryptocurrency over the next five years

Jason:

What do you think are the biggest opportunities in the cryptocurrency space over the next five years? Where will your investments focus?

Dan:

If we can achieve our ideal vision, it would be to see more consumer-oriented blockchain applications. Currently, we're laying the foundation, such as providing storage services and establishing exchanges, and we're starting to build more complex infrastructure. But within the next five years, I hope to see some truly everyday applications that are widely used by ordinary users.

Jason:

Projects like Polymarket are already consumer-facing. There's a broader trend towards closer connections between transactions and consumers. Are there any overlooked opportunities you've identified? Perhaps something that's "obvious but most people don't see"?

Dan:

One area worth watching is decentralized autonomous organizations (DAOs) . While this topic may spark skepticism, with some calling it a bubble or unrealistic, I believe many underestimate their potential. They are attracting more capital to the industry. If they can consistently increase the value of each token, DAOs will unlock enormous potential.

In my opinion, DAOs offer advantages even greater than ETFs, which are already a very successful investment tool. I believe DAOs could have a far greater impact than people realize. When I discuss this topic with others, I'm often met with skepticism. I've actually gone through a similar shift myself. When I first heard about Microstrategy, I also thought the idea was a bit crazy. But my friend Mark Casey, then a fund manager at Capital Group, took a 10% stake in Microstrategy before it was widely recognized. I asked him, "Why would you invest in this? It seems so outrageous." His answer impressed me: "As a fund manager, I'm very bullish on Bitcoin, and this is the only way I can express that view."

As a result, his investment, which was less than $1 billion at the time, has now grown to $6 billion. This deal is simply astonishing. It made me realize that sometimes, obvious opportunities are easily overlooked. My confidence in DAOs is based on this in-depth research and understanding. I believe that in the coming years, when people look back, they will recognize DAOs as a huge opportunity.

Jason:

Do you think DAOs and ETFs can coexist?

Dan:

Of course, everyone has their own preferred investment style, but I believe DAOs have the potential to achieve things that ETFs cannot. ETFs have a fixed trading structure, and you can't increase the number of tokens per share. Furthermore, most ETFs don't involve profit distribution or staking mechanisms. DAOs have inherent advantages in these areas, offering a more flexible and efficient investment model. Therefore, I believe DAOs are at least as good as ETFs, and in some ways, even better.