Translation: Baihua Blockchain

Highlights Summary

• Most institutional investors still have a 0.0% position in blockchain, literally zero.

• It is not that gold has reached a new high, but that fiat currency has reached a historical low.

• This may be the first instance in history where "smart money" enters the market last.

• The average age of first-time home buyers in the U.S. has been pushed back from 28 to 40 years old.

• We are facing an intergenerational turning point where currency and nation are separating.

• Stablecoins are very likely to take half of bank deposits within ten years.

• Bitcoin has reached escape velocity, and I cannot find any factors that could derail this process.

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

01 "Still the Most Asymmetrical Trade in History"

Host: The last time you were here, we deeply explored the macro logic of cryptocurrency. What was your first Bitcoin purchase price, which was surprisingly low?

Dan Morehead: $65.

Host: $65! Compared to today’s price of about $66,000, it's like two different worlds. In that episode, you described Bitcoin as "the most asymmetrical 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, and the broader crypto space, represents the strongest asymmetry I have ever seen.

In the early days, I would tell others: you can completely lose your principal, so don’t invest more than you can afford. But at the same time, you could achieve a return of 5x, 10x, or even a thousand times.

The reason I am still optimistic is that we are still very early. Most institutional investors still have a 0.0% position in blockchain and cryptocurrency. Literally zero. As long as the downside risk is negligible compared to the enormous scale of global financial assets, and the upside potential is redefining the entire monetary system, this asymmetry will not disappear.

02 The Four-Year Cycle Has Proven True Again

Host: The last recording was on October 12, a very interesting timing. Around October 6, cryptocurrency reached a peak, followed by a pullback. Since then, Bitcoin has dropped about 50%. As someone who has experienced multiple cycles, how do you interpret this drop?

Dan Morehead: Anything that attempts to change the world comes with a lot of hype and volatility. Optimism is sky-high at the peaks, and pessimism runs rampant at the troughs. Pantera has been entrenched in this industry for 13 years, experiencing four complete four-year cycles. These cycles are actually very regular, even predictable.

When we met in October, we were exactly near the peak we predicted two or three years ago. Based on the models of the first three cycles, we expected Bitcoin to reach another peak around August 2025. Although at that time we hoped for a different outcome, such as new government policies breaking the cycle, in hindsight, the cyclical pattern has once again fulfilled itself. The market pulled back by 50%. That sounds like a lot, but compared to previous cycles where we saw drops of 85%, this has actually been much milder. The market may need about a year to bottom out, which is consistent with past patterns.

Host: You didn’t show a bearish outlook at that time. Do you think this cycle will eventually drop by 75% to 80% like before?

Dan Morehead: That’s a key question. I did not predict it would drop this much at the time because there were many positive factors. But the market has its own rhythm. I want to point out that at the previous peaks, prices deviated significantly from the long-term logarithmic trend line, showing a wild parabolic pattern. For example, in 2013, the price surged ten times in the four months leading up to the peak. This time, however, the price has not shown that extreme overheating; it has merely returned to levels from 2021.

So I think the current price is approximately the bottom range. While it may take another six to eight months to bottom out, if you have a four to five-year investment horizon, now is an attractive position.

Host: The price is currently around $66,000. Many technical analysts say that $60,000 is a key support level, and if it breaks, it may drop all the way down to $25,000. Do you agree?

Dan Morehead: I am not good at technical analysis. We never attempt short-term timing trades. Our approach to managing funds is more like venture capital, with a perspective of five, ten, or even twenty years. From that angle, today’s price is already quite cheap.

03 Why is Bitcoin Always the First to Be Hammered?

Host: Why is Bitcoin always the "punching bag" among risk assets? When the Nasdaq and S&P 500 peak, cryptocurrencies are often the first to be sold off. Will this situation last forever?

Dan Morehead: That’s a very astute observation. Think about it: if a major shock occurs outside of trading hours from Monday to Friday, you cannot sell stocks.Yet cryptocurrencies are the only high-liquidity market of $2 trillion that operates 24/7 worldwide.

When geopolitical crises erupt, institutions want to immediately reduce their risk exposure, and Bitcoin becomes the only asset they can realize instantly. This leads to excessive selling pressure in the short term. But note that although correlation spikes during "flash crash" moments, over the long term, the correlation between Bitcoin and the S&P 500 is actually very low, around 0.1 to 0.2. Viewed over a few years, cryptocurrencies are moving independently upwards, while traditional assets may just be treading water.

04 It’s Not That Gold is at New Highs, But That Fiat Currency is at Historical Lows

Host: Let’s talk about gold. Over the past 12 months, gold has risen by 55%, while Bitcoin has remained relatively flat. Does this shake the narrative of Bitcoin as "digital gold"?

Dan Morehead: Gold is an interesting "old school" asset. It periodically comes into the public eye. Before 2025, gold ETFs actually saw net outflows year after year, with funds flowing into Bitcoin ETFs. But by 2025, people suddenly realized that the dollar was depreciating rapidly, and this urgency caused funds to flow back into gold.

But my angle of thinking is a bit different: it is not that gold or real estate has reached new highs, but that fiat currency has reached historical lows. With the money printing machines running nonstop, the amount of currency needed to buy a fixed quantity of assets must continually rise. The term "pound" originally represented one pound of pure silver, and now you have to pull out hundreds of bills just to buy the same weight in silver. Governments can print unlimited amounts of money, which is at the core of the depreciation trade.

Host: Aren't we currently in an astonishing period of depreciation?

Dan Morehead: Absolutely. The Federal Reserve defines "price stability" as a 2% annual depreciation, which is itself absurd. Stability should be zero. Even if there is only a 2% depreciation per year, a person's purchasing power would shrink by nearly 90% over a lifetime. (Editor’s note: According to compound interest calculations, with a 2% annual depreciation rate, purchasing power shrinks by about 80% after 80 years.) I believe people are awakening to the realization that they must hold a fixed amount of hard assets, whether that be stocks, gold, or cryptocurrencies.

This depreciation trade also has distinct intergenerational characteristics. Mass money printing has pushed asset prices higher, benefiting the older generation who already own properties and stocks while squeezing upward mobility for the young. The average age of first-time home buyers in the U.S. has been pushed back from 28 to 40 years old. Since the younger generation cannot accumulate wealth through traditional paths, turning to cryptocurrencies is a very rational choice. If you look at the curves of wage growth and housing price growth since 1990, you will see that this gap has become absurdly wide.

05 Separation of Currency and Nation

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

Dan Morehead: Wars always bring about lasting inflation. But more importantly, we are witnessing the "separation of currency and nation." In ancient times, currency was gold, which was inherently independent of government. Later, governments monopolized the right to print money, but it has proven that they do not manage it well.

Over the next decade, people will gradually realize that currency does not require endorsement by the state. Geopolitical conflicts are making this trend clearer— the world is becoming divided into camps. If you are a country outside the U.S. camp, or if you fear that your assets may be sanctioned or frozen, you will want an asset that is not controlled by any single nation. China once invested a large amount of its foreign reserves in U.S. treasury bonds, which has become increasingly risky under the current international landscape. Bitcoin, as an asset independent of the banking and sanction systems, is becoming even more valuable in times of conflict.

06 "Smart Money" Actually Comes in Last

Host: How many people really hold cryptocurrencies today? Are there significant institutional holdings globally?

Dan Morehead: Still very few. While there are three to four hundred million people holding cryptocurrencies worldwide, most hold them as a "play" with small amounts. However, I believe that within ten years, due to the proliferation of smartphones (about 4 billion users globally), the majority of people will start using cryptocurrencies. Its cross-border transfers are fast, almost free, and require no one’s permission.

This could be the first occasion in history where "smart money" comes in last. In the past 40 years, I have seen all sorts of investment opportunities, usually Wall Street gets the meat first and retail investors pick up the leftovers last. This time, however, it has completely reversed, with individual investors leading the way. I have been on the same stage with many alternative investment moguls managing hundreds of billions of dollars, many of whom are clueless about Bitcoin.

That’s why I am so optimistic—these smart, wealthy institutional funds will someday enter the market. Currently, Coinbase has already been included in the S&P 500 index. If you have no exposure to blockchain, to some extent, you are shorting this trend.

07 Policy Shift from Hostile to Tailwind

Host: The shift in attitude by the new government is a crucial 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 attitude toward blockchain, chasing Coinbase and cracking down on Ripple. But now the current government is willing to build this industry. While the legislative process always seems frustratingly slow, the fact that the U.S. Congress is spending time discussing things like "stablecoin market structure" indicates a qualitative change in the industry’s status.

Regarding stablecoins, this is a phased revolution that is unfolding. Currently, stablecoins may not have fully paid interest yet, but that’s just a matter of time. Stablecoins are eating into the banks' deposit market. Currently, the scale of stablecoins is about $400 billion, while bank deposits total $17 trillion. (Editor’s note: by March 2026, the total market value of stablecoins is about $300-320 billion, according to multiple data platforms including DefiLlama and CoinDesk.) In the next decade, stablecoins are very likely to take half of bank deposits, as they are available on smartphones 24/7, with an experience far superior to traditional banks.

08 Will Strategic Bitcoin Reserves Come?

Host: You are also keeping an eye on digital asset treasury firms, like MicroStrategy. Do you think governments will establish strategic Bitcoin reserves in the future?

Dan Morehead: I think this is highly likely. The U.S. already has a certain scale of digital asset reserves, largely from law enforcement seizures. And now they are no longer selling these assets; they might even start accumulating more. Countries allied with the U.S. will follow suit for strategic reasons, while countries opposing the U.S. will buy in for defense purposes. This will take time to push through the political machinery, but the trend is irreversible.

09 Why Solana?

Host: In the competition among Layer 1, why do you particularly favor Solana?

Dan Morehead: We have long held Bitcoin, but Bitcoin focuses on value storage, and it cannot handle high-frequency trading of tens of thousands of transactions per second. Solana is designed for high performance, being cheaper and faster, suitable for complex application scenarios such as gaming and high-frequency trading. The internet has Google and Facebook; the blockchain space will also have several core Layer 1s. Bitcoin is gold, while Solana may be the digital highway.

10 Nasdaq Falls 12%, Bitcoin Falls 50%—Is This Reasonable?

Host: The Nasdaq has fallen 12.5% from its peak, while Bitcoin has dropped 50%. Is this disconnection reasonable?

Dan Morehead: I think it is very unreasonable. Currently, stock valuations are at historical highs, risk premiums are extremely low, and interest rates are still high, meaning stocks are very expensive compared to bonds. The AI sector is also showing signs of overheating, with many AI companies’ valuations greatly exceeding trend lines.

In contrast, cryptocurrencies are 50% lower than their long-term trend line. From an asset allocation perspective, cryptocurrencies are now in a very attractive oversold range. Even if the Nasdaq continues to decline in the future, I think cryptocurrencies will perform better over the span of two years.

11 "I Can't Find Any Factors That Could Derail This Process"

Host: How has your mindset changed now compared to during the bear markets of 2014 and 2018?

Dan Morehead: It’s completely different. In the early days, I did have moments of cold sweat, worrying that this whole experiment would crash due to a hacker attack or regulatory crackdown. But after experiencing the collapse of Mt. Gox, multiple 85% pullbacks, and repeated regulatory crackdowns, this industry not only survived but grew stronger. It has reached escape velocity.

Host: Is there any event that could make you completely give up your bullish outlook?

Dan Morehead: A few years ago I made a long list of risks, including custodial security, hacking, and regulatory uncertainties. But looking back now, most of those risks have been resolved. While no one can guarantee that an unexpected event won't happen tomorrow, logically I can't find any factors that could completely derail this process. A smartphone-based, global currency system is the inevitable direction for human society. There are 4 billion smartphone users globally, and the financial inclusiveness brought by blockchain is far more important than sharing photos on social media.

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