Bankless - Finding 1,000x Assets & Asymmetric Returns | Dan Morehead of Pantera Capital

Episode Date: December 23, 2024

How do you find an asset with 1000x asymmetric return? How do you find the next bitcoin? Our guest today is Dan Morehead, founder and managing director at Pantera Capital. He has been buying bitcoin since 2013 when the price was just $65. His fund is up over 100x since then. There’s a lot to learn from Dan’s story, about early bitcoin history, but also the pattern recognition required to identify asymmetric assets. We cover price predictions, 4 year cycles vs a supercycle, how much upside is still in crypto, the trump administration and his thoughts on a strategic bitcoin reserve ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24  https://bankless.cc/spotify-premium  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠  🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty  ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle     ⁠  📈 iYield: YOUR FINANCIAL PICTURE, SIMPLIFIED https://bankless.cc/iYield  🗣️TOKU | CRYPTO EMPLOYMENT  https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/1?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E  ------ TIMESTAMPS 0:00 Intro 6:00 The Email from 2013 14:15 Asymmetric Patterns 17:50 Buying Bitcoin in 2013 26:25 Onboarding Investors 32:12 Crypto's Global Adoption 37:15 Bitcoin's Escape Velocity 43:19 US Government Impact on Crypto 52:21 Global Bitcoin Race 56:14 Institutional Adoption for Crypto 1:04:37 Crypto Cycles 1:09:20 2025 Bull Market? 1:12:53 Macro Environment 1:16:50 Tokenization 1:21:18 Thoughts on AI 1:24:19 The Next Bitcoin 1:26:46 Future Plans 1:27:23 Closing & Disclaimers ------ RESOURCES Dan Morehead https://x.com/dan_pantera   Pantera Capital https://panteracapital.com/   ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠  

We should buy Bitcoin now at $65 from Dan Moorhead. This email is dated July 5, 2013. Your brief thoughts were, I'm going to buy 30,000 Bitcoins this weekend with personal money. The fund can have this purchase or not, as others which. Give us the context and the lay of the land at that time when you wrote this. Bitcoin's a serial killer. It is going to rip through so many different industries.

But the only important part of that line is it will do it serially. And the hard thing in our space is that it's not going to do it all overnight. it's probably going to take 10 years to compete with VC MasterCard. Welcome to bankless, where today we explore the frontier of asymmetric assets. This is Ryan Sean Adams. Just me here today. David is out, and I'm here to help you become more bankless. The question for today's episode that I think you should be thinking about is,

how do you find an asset with 1,000x asymmetric returns, at least a profile for that? How do you find something like Bitcoin early? Our guest today, Dan Moorhead, has made his career. on asymmetric investments. He's got this letter to investors from July 2013, and I think it's legendary. The email subject line is titled in all caps, very timely. We should buy Bitcoin now at $65. Over the next two years, his fund then proceeded to buy almost 2% of all the world's Bitcoin supply. And at the time, this was a massively contrarian bet. It was hard to raise the funds. It was hard to even purchase the Bitcoin itself. His fund is now up 1,000x since then.

I think there's a lot to learn from Dan's story about early Bitcoin history, but also about the pattern recognition required to identify something with asymmetric returns, something like Bitcoin in the early days. We start with the story of why Dan decided to make a big bet on Bitcoin in 2013, and then we talk about where he thinks crypto and Bitcoin, the entire asset class, is headed over this next decade. Price predictions, four-year cycles versus super cycles, how much upside is still left in crypto, the Trump administration, his thoughts on a strategic Bitcoin reserve, and many more

topics. Let's get right to the episode with Dan Moorhead. But before we do, I want to thank the sponsors that made this episode possible, including our recommended crypto exchange, the place to go buy your crypto assets. That is Cracken. Go create an account now. Want to know the exchange we have bankless used to buy, sell, and trade crypto? It's Cracken, one of the longest standing in most secure crypto platforms in the world, with tools for every type of trader to get started. Over 13 million users trust Cracken with their funds because they lead with transparency and privacy through top-notch security measures. Plus, they'll have access to professional 24-7 365 client support from real humans because your financial goals deserve

real attention. Cracken also has a trading platform for advanced traders called Cracken Pro. Professionals and D-Gens love Cracken Pro because it's one of the most customizable, high-performance and intuitive trading platforms in the industry. Design your ultimate trading interface by choosing from over 25 widgets for market data, analysis, execution, and other order management tools. Save multiple layouts and switch between them effortlessly on any trading scenario across 300 different assets. Manage your trades on the go with Cracken Pro's highly rated mobile app or use the all-new desktop app to unlock ladder trading in a native rust application.

With Cracken Pro, you can truly trade like a pro. Ready to take control over your crypto journey? Visit crackin.com slash banklist to get started today. Not investment advice of crypto trading involves risk of loss and is offered to U.S. customers through Payword Interactive Inc. view legal disclosures at crackin.com slash legal slash disclosures. With over $1.5 billion in TVL, the M-Eath protocol is home to M-Eath, the fourth largest ETH liquid staking token, offering one of the highest APRs among the top 10 LFTs. And now CMEEth takes things even further. This restaked version

captures multiple yields across Kerak, eigenlayer, symbiotic, and many more, making CMEEth the most fission and most composable LRT solution on the market. Metamorphosis, season one, dropped $7.7 million in Cook rewards to M-Eath holders. Season two is currently off. ongoing, allowing users to earn staking, restaking, and ABS yields, plus rewards in Cook, M-Eath Protocol's governance token, and more. Don't miss out on the opportunity to stake, restake, and shape the future of M-Eath protocol with Cook. Participate today at m-eath.mantle.xy-Z. Are you looking to pay your team in stable coins or set up token grants with ease?

Traditional payroll providers aren't designed for crypto. Handling tax withholdings, government reporting, and local filings for tokens can be a nightmare. With Toku, everything about global token compensation gets simple. Whether it's paying full-time employees and stable coins, managing token grant administration, or even navigating the T-G-E process, token covers over 100 countries on one seamless platform. Integrate Toku with your current payroll system or choose a fully managed service. Either way, Toku simplifies every part of token compensation. However you work, Toku works for you. No guesswork, no missed deadlines, no complexity.

Visit Toku.com. That's T-O-K-U-com to talk with Toku today. Bankless Nation, very excited to introduce you once again to Dan Moorhead. he is the founder and CEO Pantara Capital. If you're not familiar with Dan, he is a certified OG, let me tell you. So Pantara was one of the very first investment firms, particularly from the institutional side to focus exclusively on Bitcoin and Crypto. So at the time of recording, we're here to celebrate a big milestone, which is Bitcoin is

now trading above 100K, which is amazing. Dan founded Pantara in 2013. And so Pantara's Bitcoin fund in terms of lifetime percentage to date has been a whopping 131,000 percent, okay, growth, lifetime increase. So obviously we wanted to bring Dan on, talk about 100K, the future, talk about how we got here. Dan, welcome back to bankless. Hey, Brian, thanks. It's great to be back on. So I was thinking of you because I get the Pantera investment memo and I saw enshrined inside of that investment memo was an email that you wrote in 2013 when you're just getting started. And the subject line is fantastic. I screenshot

out of this, I put it on Twitter. It says, very timely, we should buy Bitcoin now at $65 from Dan Moorhead. This email is dated July 5, 2013. Give us the historical context for that date, this time, this email, in which your brief thoughts were, I'm going to buy 30,000 Bitcoins this weekend with personal money. The fund can have this purchase or not as others which, I just want to get involved. Give us the context and the lay of the land at that time when you wrote this. No, it's great. It's fun. In March of that year, My friends, Pete Brigger and Mike Novigratz, who I went to college with, and we worked at Goldman together, and they founded Fortress Investment Group. Call to ask if I want to talk about Bitcoin. My brother had mentioned it to me a year or two before, and I'm a libertarian, so I was thinking it'd be great if it happened, but I didn't actually do anything.

And so when Pete and my call, it was great, because, you know, it was something that was cool, and I thought it'd be wonderful for the world if it really happened, but I hadn't actually, you know, lifted it. finger to help. And I went in for a coffee in their office in San Francisco. And it lasted for like four hours. I was just like so mesmerized with all the stuff we were talking about. And I actually stayed in the office for years. Pete offered me space in their offices. And ultimately they became part of our GP for a while. And I think we probably stayed like six years or something like that. So I went in for a coffee and stayed for six years because it was so compelling. And so as we thought about it, It just seemed like an incredibly asymmetric trade. And that's what I had done in my career.

I'd previously been the head of macro trading at Tiger Management when Julian Robertson was a very fantastic investor looking around the world for trades that had way more upside than downside. Risk and reward go together. You're never going to find, quote, arbitrage or anything that's risk-free. You always have to take risk. And what I had been trained at Tiger and Pantera actually was found in 2003. We started the crypto part of it in 2013.

So what I've been doing for all those years before is looking for things, you know, where obviously there's a lot of ways you could lose your money, but if it worked, it could go up more than that. And I had been working. Our previous trade at Pantera actually was Tesla Motors. I had met one of the founders at a dinner in our little community of Woodside, California. His kids went to the same local public elementary school with my kids. and he told me about an electric car.

And I was like, wow, that sounds dicey, right? Actually, one of our partners at Pantera, a guy named Ryan Glantz, used to be the number one I-I institutional investor, auto analyst, for a long time. He was a partner with me at Tiger and then moved to California, and we worked together at Pantera. He still edits our investor letter and still a fantastic partner for us. He was an auto expert, and so, you know, I called him as soon as I got the idea. he had invested in Tesla.

And he told me a fact that I love that prior to Tesla Motors, the last auto company to go public was Ford Motor Company. Like, everybody else failed. All the John DeLoreans and whatever. It was just a zero chance anybody could ever make a car company to work. So ultimately, we did a bunch of work, and I had a view on Tesla that, hey, it was a couple billion market cap at the time. Great idea, really cool.

If it worked, it could go way up, right? And the fun fact is there was a period in 2013 that Tesla Motors and Bitcoin traded the same price per share. And so we were very good at Tesla. And then we decided, hey, let's swap that. And we literally sold all of our Tesla motors and went all into Bitcoin at the time. So it was very paired trade. But it's very similar. So the price of that very long thing is looking for trades like that. They're very asymmetric. The upside's way more than the downside. And although Bitcoin has gone up a ton, I see. still think it's true. I still think, you know, yeah, it could definitely go down. You know, we've lived through three down 85 percent bear markets. I don't think you could do that anymore, but, you know, it could go down a lot, but it really still could go up in order of magnitude, right? And there's so few investments out there that actually could do that. And so when Mike and Pete and I sat around and thought about it, you know, I got sucked in. I just, you know, people say, you know, got a rabbit hole.

I just couldn't think of anything else. And I essentially haven't traded anything but crypto since 2013 because it's so captivated. I still think we're in the early days of this huge thing. And the reason I love it is there's so many things that crypto can do. You know, when you have a new technology, everyone always wants an analog to the old school world, right? Like SMTP became electronic mail,

even though it really does things. They're totally different than snail mail. And so everyone's always trying to come up with a new word for things. And so Bitcoin and other blockchains have been called cryptocurrencies. A lot of people call them commodities. The CFTC calls them commodities. But, you know, there are a wholly new thing that has hundreds and hundreds of use cases. And that's why I'm, you know, so excited as an investor, it, you know, really is going to rip through so many different use cases. And I guess one other analog would be is, you know, when you have a technology that's incredibly disruptive, they call it a category killer.

Bitcoin's a serial killer. It is going to rip through so many different industries. But the only important part of that line is it will do it serially. And, you know, I think the hard thing in our space is that it's not going to do it all overnight, right? Like Bitcoin and other blockchains are really good at some things right now. But it's probably going to take 10 years to compete with Visa MasterCard or, you know, some of these other applications. They'll ultimately get to, ultimately, definitely, definitely. But, you know, there are some things that they're not good at yet.

So, you know, I still have that view. We're really early, you know, feels like the Internet turned 50 last year, right? Like, I mean, Bitcoin's still a teenager, right? It's very young. Still got a long way to go. And I think it is still one of those trades where, although it's definitely risky and, you know, you should only invest as much as you could afford to lose 80% of, you know, it's probably going to go up a lot more than it could go.

Dan, I want to kind of get into the way you think because you're calling it a trade, right? And some people think of a trade and they think of, oh, something like day trade or something a month trade. But like you're talking about a trade in the context. Have you been holding this thing for like 13 years plus? I want to get inside your brain and how it thinks. So it's interesting to me about the founding story of Pantera, where you guys actually started in 2003. And so you've already been in place for a decade looking for asymmetric upside opportunities. And there you see in 2013 the Bitcoin trade. And then you have the conviction. to buy in size at that time, to write an investment memo like the one that we're looking at, and we're just basically saying, hey, if you guys, you're like, come with me or not, I'm buying 30,000 Bitcoin, like right now. And in 2013 to 2015, you guys proceeded to buy 2% of the world's Bitcoin. So you did this with conviction. You did this with size. I think there's a lot of, like, investors. Obviously, everyone listening wishes they had more Bitcoin. That's a thing that we all wish. We also wish we had the skill to recognize asymmetric upside operational. opportunities. What's the pattern there? How do you get the conviction on an asymmetric upside opportunity? Where do you just see that? Because some people will look at this and they'll say, Dan got lucky. There's always an element of luck involved to investing. I don't know what you call it. Maybe it's luck. Maybe it's something else. But you also have this pattern of identifying asymmetric upside opportunities. How do you do that? Can you teach that to us? Well, you're using the word pattern because I think it is pattern recognition. Like if you've seen these things happen, you know, time and time,

again, and I've actually been doing this for about 40 years. I started on Wall Street in 1987, so 36 years. And, you know, went through big S&L crisis, went through, you know, financial crisis, investing in commodities in the 80s, emerging markets in the 90s. And so that is one of the reasons I've had probably a better position than some of the younger people investing in the space in that I think I've seen this movie before. Like I was at Goldman when they did the GSCI, and now everybody considers commodities to be an asset class. I was doing emerging markets investing in the 90s and now EM is an asset class. In 2006 or seven, Pantara launched the first fund to invest in the GCC countries, the UAE and Saudi Arabia from the West, the first Western fund

to do that. Everybody thought that was super crazy because it seemed really exotic and different. Now everyone thinks of the MENA region as a completely normal place to invest. So that's been the pattern. Oh, and I went to Russia when Gorbachev was still the premier and invested with some partners in Gazprom and their privatization. And, you know, so always looking for these kind of, you know, interesting. The frontier. I mean, all of these things are Frontier asset classes.

Frontier. In 2000, we did a fund to invest in Argentine farmland after their penultimate crisis. They have one often. You know, so it's just looking at things that are kind of off the run or not normal. And again, if we want to come all the way back to present and blockchain, I think it's still true for blockchain that very few institutions really have a real-sized position, right? Like, this is still frontier? It's a $3 trillion asset that's still frontier, which is really weird. I've never seen one like that.

So it really is this pattern of having seen this cycle a bunch of times thinking about how disruptive blockchain could be. And in a couple of the subsequent memos that I wrote over the next few months, listed out all the use cases and how it's going to compete with gold, and it's just starting to do that right now. That's super exciting thing to talk about today. But ultimately, it's going to compete with Visa MasterCard. It's going to compete with all the big remittance companies that charge migrants an entire month's wages to move money across a border, which Bitcoin can do super easily and super cheaply. And so when you add up all those different use cases, you know, the ultimate value of crypto is just so much higher than it is today.

that's why, you know, in our business, there's a huge race for pundits to come up with the craziest forecast for the price of Bitcoin. I don't know where it's going, but it's going so much higher that we don't really have to think about it. You know, this might also help people to get into your pattern recognition skill with asymmetric opportunities. Could you just describe in 2013 what it was like to try to buy Bitcoin in the type of size that you're talking about? So I purchased my first crypto assets in 2014. And so a year after, like you were doing some of this, not in size. Like, not like this. and I remember like how sketchy it felt. I opened up like accounts on like, you just five different exchanges. I didn't really know what was happening. The websites were like janky. It felt like I was doing

almost like some back alley type deal. And for a lot of investors at that time, they would see all of that as reasons to stay far, far away. They're bearish given that. You somehow navigated through all of this and came out bullish on the other side. But what was it like to purchase Bitcoin in the size that you're talking about back in 2013. Well, yeah, it's so different than it is today. And if you remember local bitcoins.com where you'd like meet somebody in an alley. That was too sketchy for me. I was like, I never did that.

Yeah. I mean, it's like literally, it was one of the best ways to get crypto back then is meeting some random person in some, you know, random area and try and, you know, hand cash and get Bitcoin. So it was really hard. And that's the thing people don't really appreciate how much the world's changed. we were potentially going to do this fund as a part of a bigger public company's brand. And so we tested out all the systems, had all the funds set up, you know, made sure everything

really worked, but that company ultimately decided not to do it. So we had to do it as a Pantera branded product with not much notice because the price of Bitcoin had fallen 50%, which it often does. And we really wanted to get it launched. And so we had accounts at a couple exchanges, but, you know, France, actually hadn't tested any of them. So when the price of Bitcoin at 65, I was like, man, this is just it. We've got to go.

And it's having done this so many times, I was like, this has to be it. We've got to go. So we decided to launch and buy. It was over a Fourth of July weekend. And we'd set money. We'd totally try to prepare and we'd sent money to a couple exchanges. We had everything dialed. We had our funds.

You know, we really had it all tested we thought. I guess we hadn't really done the one last thing to try and buy a few of it. So we go in and I was using this little startup nobody'd ever heard of and try and buy some bitcoins. And there was a pop-up on the screen that said our limit was 300 bucks. And you're trying to deploy what? Millions? A couple of millions?

Yeah. And so in Wall Street, sometimes people just were bucks to say millions. I mean, this was like 300 US dollars. Like we couldn't buy anything. And so then I sent it. It was a trendy little startup. so they didn't have an address, a phone number. They just had like a little help email address.

So I hit that and I wrote in uncharacterously all caps, I'm trying to buy $2 million for the Bitcoin and hit send. You'd think you'd get a reply, right? Sure. Because nothing was happening at their little company at the time. Four days later, their only employee, a guy named Olaf, wrote me back. And he said, okay, oh no, that was it. Sorry, we started out, our limit was $50. Yeah.

One Ulysses grant per day. And they upped it to 300. And I was like, dude, I'm trying to buy $2 million of Bitcoin. It would take it 6,000 days or something like that. It would have taken forever. So luckily, we'd already sent money to Ljana, Slovenia to BitStamp. And I totally hear you. Slovenia, the country. Slovenia, yeah. Spell that out on a wire transfer.

Right. It feels super sketchy. And the manager of the branch came over and was totally hassling me. Like, what's his for? Who are you? What are you doing? And what's Bitcoin? And that just sounded so sketchy.

And even that, that was like an hour to send a wire. Like I had to sit there and talk to all the managers and all that stuff. And the funny thing is I've since spent a lot of time in Slovenia. And it's a very lovely country to the right of Venice and below Austria. Right. But at the time, I was like, wow, this money could be gone. And so we sent a bunch of money there, and luckily that worked, and we did a bunch of trays with BitStamp. We ultimately became their only shareholder for a long time.

And I was a chairman of BidSamp for six or eight years, and they're super nice people and great group of people. But it was really hard, really hard. Because the startup you were talking about couldn't fulfill the order. They blocked you at 300. Yeah, they were all small, like literally Coinbase had one employee. That was the startup, right? It's Coinbase you're talking about. Sorry, I forgot the punchline of here.

It was Coinbase. They said one employee. And I went and visited them. They were in a split-level condo over in, you know, by the ballpark in San Francisco. That looked sketchy too, I bet. I mean, honestly, yeah, like, you know, you're trying to meet a company. You're going up to somebody's apartment. Like, you know, it's 17F or whatever, you know, it's all so funny.

And honestly, I thought it was great. I love that whole era. That was a super fun era, all these very creative people. I went over to Slovenia with B. Brigger, and we met the team and BitStamp. And ultimately, you know, we became investors. and it was super fun meeting people. And like, for example, I flew all the way to Tokyo to meet the two guys that were running Mount Gauks. Wait, when you were buying, I'm just like hazy on my timeline here because I came in a little bit after Mount Cox blew up.

Yeah, Mount Cox. You were buying. Yeah, Mount Gokk was like 85% of the market cap at the time. Okay, so that was still, when we were buying, yeah, okay. Gox was still operational, had not yet, you know, been wrecked. Yeah, Gox was massive. And a little fact that's not well known is a person that was a venture, partner with us for a while, Jed McCaleb, who's one of the founders of Ripple Labs and

Stellar, he created Mount Gottz, right? He's a genius. He's created so many, three massively cool projects, but then he sold it to Mark Carpellus and had nothing to do, obviously, with the blow-up. But this is a great example of, like, he just got to do the work. Before I sent all the money, I was going to fly over and, like, see who we were talking about. And so I went all over to Japan, and I met Mark and one of his lieutenant guys. I spent two days there because we're going to send millions of dollars to these people. And none of it made sense. The stuff they were saying, I was like, man, this just doesn't feel right.

Like they're either incompetent or fraudulent. I haven't followed it since then, but I think it seems like they were both. But I was just like, I can't stand any money here. These guys super sketched, even though they were dominant. Like it was so... Everybody was trading there. So we did decide to send money to a little startup that's now called Coinbase and to BitStamp, which is the oldest exchange in the world. It's been around since 2011, Mates and Domney, and the two guys have found out of that way ahead of their time.

So all that was mega sketch. Oh, and, I mean, as you know, Mount gosh, just like they couldn't do wires in the U.S. because the Department of Justice had shut them down. Yeah. Like, you know, literally, like, and, you know, it's just all kinds. of wild west type stuff happening. And it was fun. But so, you know, we flew around and actually met, you know, went to all these countries and met people in person because it's so easy to kind of sense what's going on. I think if people are looking for patterns in the future for this asymmetric

opportunities, you're like, they should expect to be having to machete their way through a jungle here, right? It shouldn't feel easy, right? The clues where you have to go fly and you see sketchy people and you can't wire the funds, you interpreted that as bullish. You know, like weaker investors would interpret that as, ah, I can't do it, I'm done, it's bearish. The whole asset class doesn't make sense. They don't have these wires, but like to you is an indication of how early we actually were. So if that was the way to purchase Bitcoin at that time, how did you get investors on board? I know your memo talks about you flew all around the world and did 170 investor meetings that year. The sum result of that effort, we could only raise a million dollars.

So talk about trying to raise the capital from people in this like magic internet money, sketchy drug deal money type of thing, which is Bitcoin, were you just trying to evangelize and they just kept telling you no? And how did those meetings go? And how did you persist? Well, so a couple of cool threads in there. The first one is you're right. Like, if you want to make outsized returns,

you can't be investing in things that every Wall Street firm has like 20 analysts covering. Right. And Fembrider hedge funds are doing it, right? Like by then, most of the alpha is out of the industry. So you really, you know, at least my style, I love these things that nobody's focused on yet. they're still kind of funky or whatever. And we even have a little tagline at the bottom of our investor letter that says put the alternative back in alts. And I really think that's true is when I

started hedge funds in 1991 or whatever, they were super different. Like hedge funds were really edgy, alternative. And now there's, you know, trillions of dollars of hedge funds and they're all kind of the same, right? And so that's why I think blockchain should be in somebody's portfolio. It's alternative still, right? Like, it's different when most hedge funds are. are the same. But so the funny thing is that that story you're quoting, that's not 2013. That's three years later. Oh, really? That's the real... 2016, this was during kind of the winter? It's like, you know, we got in, we were evangelizing, trying to get people to invest in

Bitcoin and blockchain and our venture fund and everything. That was three years later. We're still doing it. And nobody wanted to do. This is because Gawks blew up. Yeah. There was like a negative of 90% drop in Bitcoin price. That was the era of, you know, it's all about blockchain, not Bitcoin. There were these private ledgers. No one believed in a public chain. No one believed in Bitcoin the asset. Yeah. So there have been three of those cycles. So, you know, I can't say, oh, yeah, that was the one because it's happened three times where Bitcoin's gone down 85%. It just happened, you know, two years ago or whatever. Bitcoin's traded 16,000. Like two years ago, right? So in the first of those cycles, we started investing at $65 and went to $1,000 and then crashed.

And it was down from 2014 to 2017. And we, you know, came to work every day and did our job, but like nobody really cared. And in 2016, did 170 investor meetings. We raised $1 million. Nobody cared. Everyone's like, oh, isn't that that thing that died or, you know. Mount Gox or Silk Road guy, you know, just all the fud that people have been saying all the time. You know, all that.

The management fees from that entire year's worth of work was $17,132. So it was $100 a meeting. And it was hard, right? Like so many people said no. And frankly, it's still kind of the same. Obviously, we're raising more money in larger scale these days. But I still have that same feeling that so many people haven't said yes. yet, right? Like, they will. And so I feel like we really are still at the beginning of it.

Like, there are very few institutions out there who are just max long, right? You know, that they really couldn't put any more on. Most have zero or a tiny bit of it. What was your pitch for a crypto and blockchain and Bitcoin then in 2013 and then in 2016? And what is it now? Is it the same pitch or has it changed? You know, yeah, that's funny. Either I don't have any new material or the old stuff still good. And so it's still the same. And that's why I wanted to share my original thoughts in our letter that is on our website or Twitter if anybody wants to see it. But because it's still the same. Like I get this a ton where you tell people about the fixed quantity of Bitcoin and, you know,

so it can't be debased by fiat currency and, you know, all this stuff. And then people are like, it's just like buying gold. And I'm like, no, it's like buying gold in a thousand BC, right? Like, gold's been great for 5,000 years, but it's passed its sell-by date. And digital gold is the new version of gold, right? And so that's why I got so excited, you know, originally in 2013, still is that Bitcoin is going to replace gold. Bitcoin is going to replace remittance company. It's going to replace Visa MasterCard. You know, all these huge use cases. And I'll admit, it's going to take 20 years. Like, it's not going to happen overnight. And so it's going to take a long time, but it will happen. And that's another.

I'm super convicted. It's inevitable. Blockchain is inevitable, right? Like, it might take longer than I think, and we might invest in some companies that burn through all their money before it happens or whatever. Like, there's definitely risks, but there's no chance migrants are going to pay a month's wages

to send money across a border five years from now, right? Like, no chance. And you're not going to pay 300 basis points to swipe a credit card. Like, those things, they're over. I don't know if it's a day, 10 years to be over, or like a year or two, but, like, that's why I love staying long in the same. space is it will happen. Like, you know, big changes are certainly happening, but over the next 20 years,

big change will happen. Where are we now? I think a lot of people looking at this, you know, asset class, they say things like, okay, well, you know, sure, Dan, when you bought Bitcoin in 2013 or even, you know, like, 2016, there was asymmetric upside opportunity, but like they're looking at the price of Bitcoin. They're like, I missed it. It just doubled this year. I'm not going to buy something that just, like, doubled in the year. So they think that it's like, okay, they're on the other side. They missed another bubble. It's, like, it's kind of too frothy to get in now. How much more upside do you think there is? Maybe first in Bitcoin and then just like in the crypto asset class as a whole. Maybe another way to ask that is like, what percentage of the way

are we in terms of like global adoption? Are we talking like 20%? Are we 50% right now? You know, higher or lower? How do you think about that? Yeah. So I just said this line out CBC because I love it. Any normal asset class, if something doubles this year, you should not buy it, right? because that's overvalued. It's totally crazy. And they asked, like, what do you think? You know, Bitcoin's doubles in that wild and crazy. I'm like, it's not even interesting. Bitcoin doubling this year? We've been doing this for 11 years? It's done that on average every year. Seriously, our compounding undergrowth rate of Pantera Bitcoin fund is 89%. It basically doubles, on average, obviously, every year for 11 years. And one pitch is, what if it does it one more year?

It doubles your money, right? Like, it's just not that hard. you know, and again, you only should invest a small amount of your capital that if it went down 85% your spouse still loves you, right? That's the measure, huh? Yeah, don't invest more than that, but like if you invest... Don't invest your marriage in this asset class. Yeah, like, you know, if you can keep your sizing to that level, just hold it, right? It's doubled on average for 11 years.

Yeah, and obviously the past doesn't necessarily predict the future, but I've been saying this for 11 years that it keeps doing it. So, you know, that'd be my logic. So it's getting large enough, you know, it can't go 1,000 X again, right? Because then they would literally consume all of the power of the planet. But if it went up another 10x, it'd be 15 billion for Bitcoin from when it hit the fourth, third order magnitude. All financial assets on Earth are about 500 trillion. So, I mean, that seems doable, right?

It really does. And again, I'm not going to try and predict where it's going to be 50 years from now or whatever. but in our lifetime of investing, you know, like however long, you know, each of us, you know, can kind of hold a trade, you know, five, 10 year timeframe. It really can go up 10x from where it is today

and still not be like, you know, crazy overvalued. And then your question of how far are we, it's a fascinating one. I still think we're pretty early in this, right? Supposedly 300 million people have crypto globally. It's kind of hard to really know.

And, you know, probably frankly, a lot of those people aren't really doing as much with it yet as they are going to do in the fullness of time. So my main benchmark on that is the only thing you need to operate Bitcoin is the possession of a smartphone. And there are 4 billion people that have one of those today. There's some cool projects that actually try with that kind of stuff on feature phones too. Like, Kai OS is a cool company we're talking to now that does that. But let's just say 4 billion growing to 5 over the next 10 years or whatever. I mean, most of those people are probably going to have digital currency on their phone,

right? Like, half of those people have photo sharing on Facebook, right? Like, you know, photo sharing is really cool and all, but, like, digital money is even cooler. So I really don't think it's hard to imagine three or so billion people using crypto in, you know, eight, ten years, something like that. It just really feels highly likely. And then once they start using it, you know, they'll be more applications and, you know, they'll start using for more things in their life. But I guess the punchline would be, we can't be more than maybe 15% of the way into this. It really feels like it's not that many people yet and they're not doing as much as they ultimately will do. So broad strokes, you think maybe we're 15% of the way into this crypto blockchain thing.

You think Bitcoin maybe has another 10x in it over some indefinite time period. You made the point in your investor letter, just if the, you know, the 89% compound annual growth rate, if that just continues, then Bitcoin would hit $740,000 in 2028, right? It's to be determined on whether that continues or not, I guess. But just in general, do you feel like the asset class in Bitcoin in particular has reached escape velocity? Like, there was a time in 2013 where popular narrative is like, the government's going to shut this down, okay?

Like, you're going to quash things. This is never going to make it. You know, it's a libertarian fantasy land. Now we're in 2024, completely different picture. Is this escape philosophy? Is that what this looks like? like it's kind of like inevitable that it will continue will not be killed it will you know like propagate further yes honestly i think that the kind of biggest change recently and i i think the

election puts it right over the edge is bitcoin hit escape velocity like it's not coming back and i vividly remember in 2013 all the talk about the government outlawing it and you know at the time there were silk road guy and stuff like that there's a lot of kind of you know high profile not really great-sounding, you know, newspaper articles about Bitcoin, right? And you read mainly that kind of stuff. No one was talking about, oh, two million Mexicans use it to do remittance and save themselves amongst wages right now. Like, there was no good stories like that at the time, right? It was all bad stories. So, you know, it seemed possible the government would outlawed. The U.S. government outlawed gold, right? Like, the criminalized possession of gold. When you could be walking around plutonium at the time.

Like uranium, whatever. That was cool. but you couldn't own the financial element, right? And so, yeah, it's totally plausible. But now 50 million Americans own crypto. And then one of the themes we've been writing on it, it's going to go out tomorrow on our current blockchain letter, they vote. And I've got to say, I think the Democrats misunderstood that.

Let's do the math, right? The maturity of Americans are under the age of 40. 90% of all the wealth created by the feds, I'll call them policy mistakes over the last three years, and Congress's money printing went to people 70 or older. So it's been a huge wealth transfer from the majority of Americans, you know, my kid's age and, you know, all that, to a very small fraction that are 70 or older, right? You know, this is not a polysy podcast, so I'm not going to dig into that too deeply. Let's just say those young people love crypto and they vote.

And we put a couple really cool stats on the change in voting behavior from the prior presidential elections in 2020 to the day of people under 40. Amazing shift to a phrase I haven't heard in decades, young Republicans. It's amazing. Same guy running all three times, right? And the only thing different, in my opinion, well, the only difference is unambiguously positive is crypto. President-elect Trump went super positive on crypto in May. Everyone that's been nominated for cabinet position for him is super positive on crypto. He's going to have a crypto czar.

You know, like it's just super positive. And I think when all the PhD thesis are written, crypto is going to have been the thing that changed this election. I think it's 100% that that's the fact that that one decision to go super positive on crypto pushed the election. And in males under 30 years old, voted for the Republican for the first time probably in like generations, right? And again, maybe it was some other thing, but I think they're going to figure it out that it was crypto that made people change their votes.

And so the other big thing that happened in Congress is a ton of anti-crypto senators and Congresspeople got bumped out, right? And I think that's the thing that the press really hasn't picked up on. Everyone talks about the Red Sweep and all that stuff. But the big thing is, while I totally don't get why Congresspeople were anti-Crypto before,

because who's the no voter out there? Who's the, you know, the farmer in Kansas, it's like, hey, man, if you go pro-Crypto, I'm going to vote for the other guy. You know, like, who's, you know, I never understood that. But the people that are anti-Crypto lost their seats

and a lot of pro-crypto people came in. And according to the way, Talley, I read, and I'm not going to be, I'm not 100% sure it's the exact perfect one. But suppose these are 274 pro-crypto people in the House of Representatives against 122 anti-crypto people. And then in the Senate,

it's 20 pro-crypto senators and 12 anti. And what my prediction would be is if we look at this in four years, I don't even know if any of those anti-crypto Congress people will still be in Congress. because there's no website. Hopefully they'll change their opinion. But if they haven't, they're probably going to lose the midterm election or the 2028 election. It was a bizarre cell phone to see the Democratic Party kind of like a shift to this anti-crypto army sort of, you know, posture. And it was hard to see.

I kept thinking, Dan, that I was missing something in this shift. There's some strategy. I don't see some cohort of voters because it seemed like an obviously like lose-lose type strategy. I want to ask you about kind of 2025 and moving forward. And this is the context of crypto sort of reaching its escape velocity. This is the first time in history. I think we'll have a pro-crypto administration in the executive branch. And also you mentioned Congress. Let's slice those two apart and talk about them separately.

Right. So Chris Dixon, you like made the comment to me earlier this year that, you know, the legislative is great because that's how you hard code change in the system, right? You actually want to get persistent change across administrations. You pass laws. And that's one set of the change we can. expect to see. But the first set is actually the administration. And under the Biden administration in the past four years, anybody who's listening to this, anybody who's been in crypto knows that there

actually has been an Operation Chokepoint war on crypto, Gary Gensler's SEC. It seems like overnight, all of that is reversing. And I want to ask you what you think the biggest effects a pro-crypto White House might be. And maybe the first place we can start is this idea of a strategic Bitcoin reserve. It's hard to know how much power the executive branch actually has over this. Of course, listeners will know the U.S. government currently holds 200,000 Bitcoin. This is from seizures. They haven't purchased this on the market, but they own it. And the default process, I think, under, you know, an anti-crypto executive branch would probably be to proceed to sell this. Maybe the Trump administration doesn't. Maybe the Trump administration does more and establishes a Bitcoin reserve. That sounds,

if you would go back in time to 2013 you, I don't know if you could have foreseen that. That sounds like fantasy land. That sounds like beyond your wildest dreams type of success for this asset class, that the largest economic power in the world would start stacking crypto on its balance sheet. And yet, this is what's being circulated. As recently as last week, Trump sort of semi-confirmed. I saw a Forbes piece, I haven't jumped into this about Trump talking about a strategic Bitcoin reserve and what that might look like.

What do you think the likelihood of that in itself is? And what's the impact? Yeah, so I think you're right to bifurcate things that can be done by the executive branch from things that require Congress to prioritize and pass legislation. It is my understanding that the executive branch controls the U.S. Marshals Service and can decide just to stop selling Bitcoins. And that is very easy to do. And we participated in the first Marshall's election in 2013 or 14, whenever that was. Super cool to see their five. five-pointed star on a Bitcoin sale poster, which is really cool. What do you mean by that? Was that that was some Bitcoin was seized and you purchased it directly from the U.S.

Marshal Service is the entity that seizes assets from criminals and sells them. And they started doing Bitcoin sales in 2013 and 14. And they have a really cool logo. It's a five-point star like in the West Sheriff. Okay. And so it's my understanding that the president can just unilaterally decide to stop doing that. And as you say, the United States already owns 1% of the world's Bitcoin's, right? So that's awesome. And if they stop selling, that's good. I'm not even going to remotely try and guesstimate what Congress can do because, you know,

it's a very wild animal out there. So that might be hard. But just not selling 1% of all the world's Bitcoin is huge. Because remember, the float on Bitcoin is pretty small. There's a lot of people, including Satoshi, never sell. They just have their crypto. So 1% is a big amount. The Arbitram Portal is your one-stop hub to entering the Ethereum,

With over 800 apps, Arbitrum offers something for everyone. D-Fi, where advanced trading, lending, and staking platforms are redefining how we interact with money. Explore Arbitrum's rapidly growing gaming hub, from immersed role-playing games, fast-paced fantasy MMOs, to casual luck-battle mobile games. Move assets effortlessly between chains and access the ecosystem with ease via Arbitrum's expansive network of bridges and onrifts. Step into Arbitrum's flourishing NFT and creators-based. and creators based, where artists, collectors, and social converge and support your favorite streamers all on chain. Find new and trending apps and learn how to earn rewards across the Arbitrum ecosystem

with limited time campaigns from your favorite projects. Empower your future with Arbitrum. Visit portal.arbitrum.io to find out what's next on your web-free journey. Are you ready to take control over your entire financial life? Crypto, defy, and fiat all in one place? Meet Iyield, the free financial planning tool built for crypto natives. Unlike traditional portfolio, trackers that just show you the value of your assets,

eye yield goes deeper. It consolidates everything, assets, debts, income, and expenses, offering you a complete financial picture across 16,000 tokens, 40 defy-fi protocols, and all fiaturrencies. With real-time defyield tracking for platforms like Ave, Athena, Eigenlayer, and Uniswap, iYield ensures that you're always on top of your staking rewards, investments, and cash flow. And the best part, it's 100% free with no ads and it's secure. No personal data, no ID requirements, no compromises. So head over to iYield.com. So sign up today and get the guesswork out of financial planning.

Uniswop Labs is making history with the largest bug bounty ever. $15.5 million for critical bugs found in Uniswap v4. This isn't just any update. Uniswap V4 is built with hundreds of contributions from community developers and has already undergone nine independent audits, making it one of the most rigorously reviewed code bases to be deployed on chain. And with $2.4 trillion in cumulative volume process across Uniswap V2 and V3 without a single hack, the commitment to security and transparency is rock solid.

Now Uniswop Labs is taking an extra step to make V4 as secure as possible with a $15.5 million bug bounty. Head to the link in the show notes to dive in and participate in the Uniswap V4 bug bounty. All the details from eligibility and scope to the rewards are there. It seems like Trump could or the executive branch could not only not sell, but they're also, of course, executive branch over treasury. It's like Fort Knox where, you know, the U.S. keeps its gold reserve. It seems like the presidential branch would have some executive powers over that. And so, you know, if you just sort of start custodying the Bitcoin that you haven't sold, that's kind of the beginnings of a strategic Bitcoin reserve. It may not be fully what people

hope for. I know Senator Lummis was talking about like building up to a million Bitcoin worth of supply, which would have to come by way of purchase later. But like, can you see the executive branch just at least keeping the 200K and setting up some sort of custody type structure? with its powers? Yeah, I think that one seems very likely, because as far as I know, it's within the executive branch's purview to do that. And so I would say the U.S., which is currently moving bitcoins around right now, the U.S. government, and selling them, moving to exchanges, I think that'll stop, and then that'll be great because it's a flow that at least neutralizes. You know, prices reach equilibrium with buying and selling matching, and when you remove a seller,

it, you know, helps the price go up. And I also think it's a great strategy, right? When you are the world's reserve currency, you don't have anybody else's currency to save in, right? Everyone else can save, even the Chinese who, you know, are at war with us, saving U.S. dollars, right? So, Russia, like, that's the reality. You have to save in the world's reserve currency. The U.S. is that currency, so we don't have somebody else's. You mentioned Fort Knox. It is totally anachronism that the U.S. stores 11 million years of wages in a stone pyramid in gold. just like the pharaohs like 40 centuries ago right like it's so out of date and so yeah i would love to see the u.s increase its holding of digital gold and then you know as a citizen i'd love for them

just to sell the old school gold because you know it's not really doing anything so i think that is coming that the u.s will stop selling which is really important the fun bit though is to remind people it's not radical like singapore's own cryptocurrencies for five six seven years or whatever like you know, very well-run countries like Singapore, they've been doing it. It's not like super crazy. Like, you know, they've all kinds of other assets. Like, why not own what I think is a very compelling asset, Bitcoin, right? So that's why I think we'll come around to it. And there is a petition in Congress to do this, to create a strategic Bitcoin Reserve. And as you said, everything got really partisan, which is really weird, because, like, Roe Conno is a very intelligent

congressman from California and a Democrat. He said, you know, it's like the self. phone. Like, why is it partisan? Like, you know, I don't know why. And frankly, if anyone should have made it partisan, it's the Democrats. Bitcoin's like the progressives dream is amazing. And there's a great congressman from the Bronx, Richie Torres, who's really fun to listen to talking about it. You know, I hope it isn't partisan. I hope that it can get done. But, you know, I think we will be storing at least the 1% that U.S. currently owns in Bitcoin for at least the four years that the president-elect will be serving. I'm wondering what you think that kind of kicks off.

Let's say that's the base case, all right? That seems very doable. It seems like Trump has kind of the political capital and will and the powers to kind of pull that off. Just keep the Bitcoin you have, the 1%, the $200,000, right? Let's say we're not able to get to the kind of the bull case, which is, you know, Congress, legislative body goes and passes some bill to go purchase more Bitcoin. But even at the base case, we keep what we have.

And we sort of announce that. Project that to the world, right? You have to wonder what the game theory of other countries will start to do in the wake of that news, right? So what does the U.S.'s chief economic rival China do with that? Well, they also have around 200,000 Bitcoin that they have seized from various seizures in their country. Do you think that they will proceed to sell that Bitcoin if the U.S. is like announcing that they're holding their own and possibly buying it? Or do you think they'll keep it as well? Do you think that some countries around the world will, whether they broadcast it or not, maybe many of them would

be wise not to broadcast this, will start stockpiling Bitcoin? Right? It seems likely that they would. So, like, what we're kind of kicking off is a, you know, expansion of Bitcoin and this sort of, you know, race to acquire more Bitcoin, which is kind of what people talked about, what you talked about in your memo from 2013, where you talked about, you know, Bitcoin being gold, except gold in 100 BC, before all of the different nation states and empires and powers, you collected a whole bunch of it. And so do you think the race is basically on if the U.S. does this? And what does that do to price? Oh, you said it better than I could. Yeah, I think a strategic Bitcoin race is on, arms race is on. And it's going to take 10 years, but it will happen, where the U.S. is going to hopefully retain 1% of the world's Bitcoin's China, hopefully will.

And again, think of the irony, right? There's these regimes like China that are in, you know, kind of, you know, semi, well, let's just call it competition with the U.S. Why are they storing all their wealth in U.S. dollars and U.S. treasuries, right? It doesn't seem smart, right? And then the U.S. sanctions regime can control every little check they write, you know? So, yeah, I think it seems pretty obvious that especially countries that are antagonistic to the United States of the West would want to store their wealth in Bitcoin and even neutral countries. Like, you know, it just seems smart to have some of your wealth in a different form of reserves, you know. That's why some people use gold because it has different properties than U.S. dollars, which have to go through U.S. banks and all that stuff.

But Bitcoin's, you know, it's another great alternative. Let's talk about Congress for a second. So this is the most pro-crypto Congress we've ever seen, like to your point. Do you think we'll pass any meaningful crypto legislation? The stable coin bills have seemed like they're almost bipartisan. There's certainly a lot of wins that the U.S. can lock in from good stable coin legislations, basically, you know, maintain and preserve the world reserve currency status of the dollar seems to be one key win.

Do you think that passes? What happens with the pro-crypto Congress? So I've been so excited about blockchain for 11 years. I come in every day with this list of super interesting things I could work on every day. Trying to figure Congress out is not one of them. Most I have nothing to know because it's just a machine that I just don't get, like Chancellor Bismarck says, some things you don't want to see produce laws and sausages, right? And so I don't, I literally spend no time thinking about Congress. because I can't really influence anything. And, you know, it's too hard for me. Talk to me about institutions then. Institutional ownership. This has been huge in 2024. People like Larry Fink,

basically saying, hey, I was wrong. I was wrong back in 2021 about Bitcoin. And I've since revised my position. The ETF products, of course, have been smash hits. Absolutely insane. I think the last time we spoke, Dan, was like 2022. And it was sort of before all of this institutional wave of adoption. And even from Mike Novigratz, you know, your former coffee colleague and who you went to school with, kept repeating this phrase, the institutions are coming, institutions are coming. And it seemed like they weren't coming. It seemed like where are they? Well, in 2024, the institutions did come. They're here now. We've got tokenization. We've got ETF products. But how here are they? What's the institutional ownership and adoption of crypto right now in terms of like how far along we are? Yeah, so I think to kind of help Mike out on that is I think we all thought they were coming a few years ago. And we've had some big institutions invested with us for a decade, right? So there are some. But like when you're talking about like, you know, huge stampede.

Yeah, he said the herd. He used that phrase. Yeah, the herds coming. So we all, we did think it was coming. But FTX happened, you know, Block 5 Celsius, Terraluna, GBTC, crushed discont. stuff, you know. And then the Security of Exchange Commission sued Coinbase and Ripple Labs and like all these great companies, right? Wow, just polar ice cap on the whole thing, right? If you're you know, public pension plan, what are you going to do? Run that up to your state legislature and go,

hey, I'm thinking about Bitcoin today. Like it just there's no chance, right? The thing I don't think enough people realize is how quickly that can go the other way, right? If we find ourselves in 2025 with a pro-crypto Congress, pro-cropro-President, and regulatory agencies that are at least neutral. Which we will, right? I mean, that's happening. Yeah, it seems like that's going to happen. Wow, everything could flip.

And that's why you're seeing the price surging, massive inflows into the ETF. And I think you're right. The ETF is such an important thing, right? You know, we launched the first crypto fund in the United States. And I thought, yeah, we launched as a Kman hedge fund because I thought, hey, it might take a few years to get an ETF through. That was 11 years.

years ago, right? Well, didn't the Winkle Vosses apply for an ETF back in 20? Like, it was around that time frame. Definitely a long time ago. Yeah. And my point being, wow, having waited for 11 years since we started in 15, I guess, since Bitcoin was around, that we were kind of repressing this desire to invest, right? And so it's not surprising that the Bitcoin ETF has been an epic huge thing. $35 billion has net flowed into Bitcoin ETFs. And you kind of have to also include micro-strategy, which I know is not an ATF, but it kind of looks like one. That has 18 billion of inflows into it. Now in the NASDAQ?

Yeah. So that's, you know, better, more than 50 billion into ETF or ETF-like products. And then this is a really cool stat. The flows into all of the gold ETFs on Earth are zero. Wait, really? So no money is flowing into old school goal, the 79th element on the period. table and 50 billion flowed into digital gold Bitcoin ETFs. Like that's the change. And that was the thing I was thinking, you know, 12 years ago when we started is, hey, you know, Bitcoin's going to go up and, you know, replace gold and it didn't happen. The ETF is helping it happen. Wow. So is that kind of a base prediction? I mean, when you were talking earlier about, you know, the 15 trillion, that's about gold's market. What's gold? Yeah. That's why I think it's going to happen, right? Because, you know,

Bitcoin does everything gold does, but you can ship it more easily. You can store it more. easily, you can do fractional sales, all that stuff. And so I think it will eat in gold's market share, you know, that the U.S., like you said, why do we store all that gold under Fort Knox? Like, it's crazy, honestly. And I'm not in any way predicting the U.S. will actually sell gold, but I think it will buy Bitcoin. So I think, you know, over time countries and people will over-emphasize buying Bitcoin and not gold. And we've seen that since January when the first ETF was launched in Bitcoin, $50 billion into ETFs. and micro strategy and zero into all of the gold ETFs combined.

So what do you think of institutional adoption for crypto right now? Like back to that percentage scale, how far along are we, right? It seems like with people like Larry Fink pivoting and you're talking about the setup for 2025, things could shift quickly. But there's still, you know, like Vanguard will not allow an ETF or crypto assets inside of the Vanguard ecosystem. There still seems to be some resistance. It doesn't feel like we're at 100% now.

Like how far along are we with institutions? adoption. Well, one of my favorite lines about this is so many people say Bitcoin's a bubble. And I'm like, how can you have a bubble nobody owns? The median holding of blockchain blockchain is zero. Wait, wait, what? The majority of institutions have no meaningful exposure to blockchain. What do you mean by institutions? What are we talking about? Life insurance companies, pension plans, you know, endowments, foundations, you know, all the kind of institutional investors that hold real estate and equities and private equity. They still have zero?

Nothing? I think the majority of them have a number that basically rounds to zero of directly held blockchain. Maybe they invest in some generalist venture firm that, you know, invest in one blockchain company or something like that. But I think it's still true that the majority of institutions have not actively written a material check to blockchain. Does that mean we got to 100K just on kind of retail?

Literally retail front-running the opportunity here? Yeah, the smart money isn't in it yet. It's all the dumb money. That's great. Yeah, so that's why I'm so bullish. I think, you know, we really just haven't started yet. And the point being, when you have institutions like BlackRock's, biggest manager on Earth, you know, and they're out there very publicly. And they have a great blockchain team.

Like, you know, always positively talking about it. That's very helpful. Fidelity was super early. They started their whole blockchain. project in 2014. They've been very supportive of the space. You know, all that is so helpful. And I guess the reason I wanted to say that is

I have been evangelizing for blockchain for a long time and so many times. I'd be in a room with a big bank or big whatever institutional type investor and they would say we can't do it for compliance reasons. And I'd be like, huh,

essentially, I've run a couple of compliance departments and I have no idea what you're talking about. What is the compliance reason you can't do it. And they're like, it's because of compliance reason. Like, you know,

it made no sense. They just use that as an excuse. There's no reason, like, you can't invest in, you know, a Bitcoin ETF or whatever. And so now BlackRock

and Fidelity and BitWi and all these people are selling very regulated, incredibly awesome products. You can't say, oh, we can't invest for compliance reasons anymore. And even like Vanguard, right?

Like, I don't know how long it's to be defensible to say, oh, you can't have Bitcoin in there or whatever. Like, I mean, if $80 billion wants to flow in a micro strategy, it seems relevant, right?

Like, you know, who might have kicked them out or whatever? Yeah, I just love this story. I mean, part of the line of bankless from the early days has been front-run the opportunity, and it seems like there's still time to front-run the institutions on crypto assets. No, no, it's a great line, and it totally applies to it. Talk to us about cycles,

so you've been through a number of cycles here, and it feels like we're in a bull cycle at 100K Bitcoin all-time highs. I'm sure you'd agree with that. What happens this cycle? Is crypto inevitably going to play out in four-year cycles? You know, traditionally people have talked about that may be driven by the having. Others have talked about this is just kind of like global liquidity, you know, the ebbs and flows and these four-year cycles. And so kind of when liquidity and the fiat sort of rushes in the market, then crypto has a bull market and it'll bull and then it'll kind of, you know,

bust off the top. Is that where we're headed for in this current cycle, just repeating four-year cycles forever? I think so. Really? That's your base case. You don't believe in the super cycle or that we just like break the mold? It just seems so obvious. Yeah. When I was in college, one of the professors wrote this very famous book, Random Walk Down Wall Street about how everything the market was totally efficient and all that stuff. And there's a great line supposedly by Warren Buffett that says the difference between the market always being efficient and often being efficient is 80 billion to me, you know? And that would be my thought here is when I first heard about the having, I had your kind of mentality.

It's like if we all know it's going to happen, then it can't happen, right? Right. But I lived through that in 2013 and 12 or whatever that was. 16, you know, it's true. It's true. I totally believe it. And the reason it's true is, and it's the halving, in my opinion,

it does it, is miners sell every Bitcoin they get to buy more machines and more hardware and more electricity, right? And they just do that. And in any other market, like copper, said, hey, we're going to shut down half of all the copper mines on Earth on August 12th, CETO, 2023 or 2024, man, copper go way up, right? And that's what happens here, is that every four years they shut down half of the production. And so when you have a constant demand and you cut the supply in half, it does go up. So the market's gone through very pronounced cycles.

Here's the only thing that is different. The kind of amplitude of the cycle is moderating. each time. Okay. The thing to remember is that in the first halving, the amount that was reduced over the next year was equivalent to 15%

of all of the above-ground Bitcoin at the time, right? Yeah. Like the halving was big and there weren't too many bitcoins outstanding. Obviously, the next halving was half as big

and there were more bitcoins outstanding. So it was about a third as big as an impact. So each halving is getting lesser and lesser of importance and obviously in 21,

36, the last halving, it's not going to have much of an impact, right? But right now, it still does have an impact. And I have the stats here is that we think our data is that the having starts about 400 days before the actual halving, the impact, the low in the markets, and then the high is another 480 days, actually, after it. And it has done that each time. And two years ago, when Bitcoin's at 17,000, we forecast that it would hit 28,000 at the halving, and then $117,000 next August at the 480 days after the having peak. The trough was within a couple of days, I think, of what we had forecast. You know, that it did bottom in.

And it's a bit ahead of itself right now. It's almost that, you know, it's getting closer to 117. But it has been predictable. And the last having, we put out on Twitter a forecast where it would be each month through 2020. And we said that in August 2020, if my memory is, right, it'd be $62,642 on August 15th of 2020, it hit it that day. Like literally that number on that day. And so I still believe in it, right?

It keeps happening. And so I think we are going to have a big bowl market and then we're going to have a bare market. But the only thing I would say is I think that having done 3, 85% down drafts in the 12 years we've been doing this, the next one, hopefully, God willing, will be, you know, 50 or 60 rather than 80. At least for Bitcoin, maybe not the long tail of crypto assets. Yeah, so I do think the four-year cycle is totally real. I think we're still kind of, you know, in the up phase of that. And then the next down draft probably would be less. So the base prediction, just in case people

aren't tracking this, right? So last year was the having. It was April, 2023, I believe. So we're, you know, 400 days, I guess, within that, something like this. And so if we just follow the four-year cycle, does this mean 2025 is basically a bull market, 26, we start going down? Yeah, that's the format that I would have in my head. And I think it was April 19, 2024, this year that we had to happen. And so August of 2025 would be the peak. Okay.

And man, everything's kind of setting up for that, right? It just seems too easy. Back to the kind of the... I know. I know. I know. Yeah, like, I get it. And we've had this conversation every four years for 12. So, you know, I know it sounds ridiculous to say, but at least we always forecast it moderating

that the previous halving cycles were way bigger in amplitude. This one is smaller, but, you know, I still think it's pretty real. And that's just the halving thing. But everything in the political and macro thing is setting up for it to be great for crypto too. So it's hard not to be pretty bullish on 2025. What's your take on macro stuff? Does this impact things in a positive negative way? Bitcoin impacting macro?

or the other way around. Wow. Bitcoin impacting macro is not the way I've typically heard that phrase, but maybe it's big enough to start impacting macro. I was thinking more macro on Bitcoin. Yeah, I would say from the macro side, I'm still super dubious on the ability for the Fed to cut. And in December of 2021, when...

You have been consistently, because I've been reading the Pantera, like, updates from you. In December of 2021, the Fed funds rate was zero, and the 10-year note was 1.3. and I said both were going to go to five and stay there for years. And I still believe it. Like, the economy's booming. Like, the Fed's going to cut.

If you've ever been to an airport? Like, go to an airport and see if the Fed should cut. You can't even move. It's, like, physically impossible to walk through an airport right now. Unemployment's as low as it's ever been. Wage inflation is really high. Like, there is no reason to be cutting rates. And the stock market is an all-time record highs.

And, you know, like, people that think the Fed's going to cut are crazy. crazy, in my opinion. And rates should be where they are. Fed funds, let's see, the real Fed funds rate, 140 above where core inflation is right now. So it's slightly restrictive, but not that much. So, you know, it just seems like there's not much room for the Fed. And then the fiscal thing in the U.S., and potentially globally, but I know the U.S. better, we are running a two-trillion-dollar deficit in the best of times. Like, there's nothing better that could be happening. Everything's record highs, everybody who wants a job has a job. Like, if we're running a deficit now, wow. I mean, there's some bad times coming. And that's hashtag buy Bitcoin, right? Like, okay. Yeah, well,

so translate all this. Is that effectively what the signs you're reading in macro, if we're running at a deficit, you know, the U.S. is continuing to print more money. They're talking about cutting. You don't think that's possible. Maybe they cut. Maybe we keep, like, constant. But in general, what does all this mean? Is this basically like money printing? And so commodities go up, in particular digital asset commodities, a number go up? Yep, yep. You said it well. Our country, and then, again, I don't know the other countries well, but in the United States, there seems to be an addiction to printing money. Like, there was a slide this direction prior to COVID, and then any fiscal restraint is out

the window, like literally sending $1,200 to every person in America a couple of times. and they're like, wow, I wonder why groceries cost so much. Like, that's why. Money to all these people, right? And so the fiscal thing is very hard to see how to get out of because we're running a massive deficit, biggest ever, in the best of times, right? And so fiscal policy is supposed to be countercyclical, right?

You're supposed to be holding everything back when it's ripping, and then you have some ability to ease when it's not. And so it does look difficult. the U.S. now spends more in interest than it does in the military, which is fascinating. And the current administration financed it with an adjustable rate mortgage. You know, we brought the duration of the treasury debt down to an arm. And I think rates are going to stay at 5% or higher forever. So, like, that could be very expensive because we've got to refinance all that debt at higher and higher rates.

And so, again, I don't spend a lot of my time studying the fiscal and, macro side, the only thing I know is I'd much rather own Bitcoin than U.S. dollars. And you mentioned commodities. The way to think about it is not that gold's at a record high and Bitcoin's at a record high and stocks are record highs and housing's at record highs. All those things are actually kind of not moving. It's paper money is crashing. Denominator. Yeah. It's the paper money is crashing. Everything else is kind of doing its own thing, right? Like Bitcoin against gold, against stocks, against whatever real estate. You know, And so that's really the right perspective.

And we did a graph that I should update where he had the price of U.S. dollars in soybeans, in real estate, in gold, whatever. And that's the thing that's crashing. And so, yeah, I think you can't want to hold paper money, given what's going on the fiscal side. Like, it really, I don't see how they get out of it. And even a former negative crypto person, Ray Dalio, just was on the tape. And I apologize for not having read the whole article, but I did see the headlines, that he's saying there's a debt crisis coming

and you should probably own some gold and Bitcoin and he's obviously a very smart guy and at least I agree with that headline. It's notable by the way. I've been following Dalia for a while because I think his basically his ideas around kind of like monetary cycles are like spot on but he's always his answer to it has been commodities

and particularly gold and this is sort of this year has been the first time that he has also included Bitcoin as an answer to that which is kind of notable coming from Dalia. It really is and I think you're right to focus on these incredibly talented people that used to be negative that now see it, right? They were just waiting for it to be a bit more consensus, I guess, right? Part of the monetary phenomenon here is money has to be, it's a consensus technology.

It's a social coordination technology. So it's not money unless it has the deep liquidity of being consensus, right? Yeah. So that's part of the effect. Let's talk about some other crypto areas really quick. tokenization, real world assets, that's kind of an institutional play. Do you think all of the assets basically come on chain is, are we, and now kind of like an S-curve where all the traditional finance assets,

starting with stable coins, of course, the dollars on chain, which were at $200 billion, but treasuries, you know, then later stocks and bonds, does all of that begin to come on chain now? No, it's a great point. And that's, again, one of those serial killer-type things. We've been talking about that for 10 years, and, you know, we've made a few investments a little early that didn't work, and now it is working, right?

And you're right, stable coins, great example of bringing something kind of normal and boring, like treasuries, T-bills on the blockchain, but then it helps people do really cool things. And then projects like Ondo and others that are trying to help people get access to financial markets in the U.S. super important. So it's a really important thing. And even putting treasury bills on the blockchain, you're like, oh, whatever, that's not that big a deal. It's a really big deal because there are a lot of people that don't live in the United States, right? So you get 8 billion people that would love access to U.S. dollars and to treasuries, but they can't.

And then even American citizens, probably not too many youngsters have ever had one of these, but I used to have a Treasury Direct account. It's where you can buy treasuries directly from the U.S. Treasury Service. Wait, really? I didn't know that was a thing. Yeah, it's a thing. That was kind of back in the CD era and all that stuff. Like, you know, I know probably not that many people do it in your age group.

But the hilarious thing about that is you used to buy treasuries directly from the U.S. government, so you didn't have to use a broker and all that stuff. if you want to send your Treasury Direct balance to a broker like Merrill Lynch or whatever, you have to wait for a year. Wait, what? There's some government worker in the stack of withdrawal request for Treasury Direct that is so high, it takes a year to get your 90-day T-bill out of the government into Merrill Lynch. That's insane.

And if that's not the best advertisement for blockchain and RGWA ever, that's it. is like you thought you were doing the smart thing. You're trying to buy it directly from the government and then you get locked up for a year. So those are good. Another great example is figure markets, which is founded by Mike Cagney, who I've known for about 30 years,

super intelligent, former founder of SOFI, doing what I start out as a mortgage-backed securities trader. Mortgages go through so many little mouths that all take a little bite out of it. It takes 55 days to go from the person and borrowed the money to the person that actually is the owner. He's doing all that on the blockchain.

It's a great example of taking all these inefficiencies out, and they have, I think, 10 billion of mortgages on the blockchain already, right? And it's a hundreds of trillion market. Like, that's massive. And so tokenization of real world things is happening. The only one I'd be dubious on is tokenizing things like hedge funds or, you know, private equity funds or even Pantera capital's funds, you know, because we're not trying to distribute it to everybody on with a smartphone.

You're like, you know, we're trying to sell it to people that are qualified purchases by the SEC and all that stuff. So that's the one area that I don't share. Sometimes you hear people go, you know, all these funds will be on the blockchain. They might, but like it's not broken. Right now, like we connect with sophisticated investors pretty easily. But all these other things like treasuries, yeah, you know, it's a great use case. And, you know, honestly, that's the funny thing about the U.S. government. They should love blockchain.

I totally should. It's going to help pump the deficit to anybody on Earth. smartphone, right? That's great for the U.S. government. Yeah, $200 billion in net purchasers of treasuries. Yeah. That's what stable coins are doing. That's a huge use case. A big plus one on like, I own some kind of treasuries in the money markets locked inside of fidelity, right? I tell you, Dan, if that was an ERC 20 and I could like do things with it, if it was liquid, if it was portable, if I could, you know, spend it, if I could transfer it, that would be an incredible user experience. I mean, the fact that we're not there yet and, but we can go there with crypto is like,

all the upside you need. I want to ask you about one other area before we close, which is, do you have any thoughts on, like, crypto and AI and everything that's going? Because so another S curve right now, I don't know if this is, I guess, a few years ago, would have been a huge asymmetric upside opportunity. And, you know, many folks say we're still early is artificial intelligence. But that is now meeting crypto in a very interesting set of ways, right? So with crypto, we've created programmable money effectively, particularly with chains like Ethereum and others, which is like you could do things with them. You can program with them. Now we have AI, which is basically like some of these agents are literally machines that, you know, are they going

to prefer money you can program or money you can program? I think it's programmable money, right? And so we've built this entire blockchain ecosystem effectively for them. What do you think the intersection is going to look like with crypto and AI? Are you looking into sort of AI stuff? Oh, definitely. No, it's a great question. Super important. Obviously, AI is huge and it's coming at a rapid rate. There are two very important reasons why blockchain and AI really do have to go together. The first one is, you know, AI is so important and it's so impactful for society. It just seems obvious it'll be better for us all if it's decentralized and open rather than, you know, for-profit, single person running it, all that. So we've invested in a handful of projects like

Sintin, Sahara, that are helping build out the, ability for AI to be built in a decentralized way. One kind of small point on that is these models have already read the entire internet, right? There's nothing more to learn from, right? And so next generation AI models need data that's not yet free. And wow, blockchain is really good at providing incentives. And so if the next generation of AM models need stuff they can't get for free, they have to incentivize people somehow. And blockchain is a great way to do that. And then the last one about you know, whether these AI agents, you know, want to use, you know, a normal kind of money or programmable money. Yeah, they probably want programmable money, but they certainly can't get a

Chase Manhattan bank account. Yeah. And so they have to use digital money of some kind. And again, like, I'm sure there's somebody out there with some idea of something other than blockchain, but it seems like it has to be blockchain, right? That if you're having, you know, computer agents interacting with each other, they have to use computer money, right? And so I think both of those are hugely important. And it just doesn't seem like AI is going to be able to function without blockchain. And obviously, you know, blockchain, you know, there's a lot of overlap already. But I think, you know, in the next five or ten years, it can be even more. So as we close this out, Dan, I want to get your takes on just some general advice for investors, you know, like right now. So

the Bitcoin Fund, the original Pantera Bitcoin Fund, I said this in the intro, is up 130,000 percent. Okay, guys? Like 130,000 percent. is there anything like that? Is that like a once-in-a-generation type of return profile? Or do you think there are opportunities, there will be opportunities like that, for investors in the decades to come? Well, I am a huge fan of promoting or suggesting blockchain

to anybody entering business, you know, like any young person, is I'm all in. I think it's going to be so important, and, you know, I'm devoting the second half of my career to it. But if you're starting out, definitely get into blockchain. right? Because what if I'm wrong? You spend a couple years, then you have to go back and get a real job. So you should definitely be in it. And the same thing with investing, and this is another thing that politicians haven't figured out, is these policies that Congress and the Fed has pursued have really

frozen out a younger generation that is very difficult to afford to buy a house. It's very difficult even to think, how should I save for my down payment? And all these old people are super negative on blockchain and, you know, talking about all this negative stuff. but they get it, right? The young people who told they get it, blockchain is super important. And so I think it's entirely rational that they're saving slash speculating, investing, whatever you want to call it, in blockchain, right? Because, you know, policies have been tough on them in other markets, so why not kind of front run the opportunity, as you said, against the old people who don't get it yet, right? And so I'm a huge fan of young people investing

in blockchain. The only thing I would say is trying to buy a more diverse portfolio. Don't just buy one mean coin, you know, and it hope it works. You know, buy enough stuff. So, you know, if a couple things don't work, a couple things do work, you end up doing well. But again, you know, if you're just starting out, I really actually do think it's a great thing for young people to really invest big time in crypto. Obviously, the older you are, and if you have a spouse, you got a mortgage, you know, you got to dial everything back. But, you know, I think it is just such an important space. And the cool thing is the young people are ahead of the older people. Dan, what are your plans for the, you know, I guess the rest of this decade. What do you plan to do? Just continue with

Pantara doing what you're doing. I mean, there's some spots opening in the government, I would say, in terms of like, you know, pro-crypto policy. I don't know if you're going to get involved there. What's on your horizon? Yeah, I'm just focused on doing everything we're doing bigger and better, you know, like we manage money for our limited partners. That's a huge honor, but we don't want to sway, get distracted away from that. You know, there's no other business lines we want to be in, but we just want to keep doing what we're doing, you know, bigger and better. Amazing. Dan Moorhead, it's been a pleasure. Your ability to identify these asymmetric opportunities has been pretty legendary. Bankless listeners will include some notes in the show notes here

with the investor letters that I mentioned. It's kind of historic. And Dan, thank you for guiding us through the patterns to help us identify these opportunities. And your bullishness on crypto is certainly infectious. So I appreciate everything you're doing. Thanks. It's been a blast being back on. Bankless Nation, got to let you know. Of course, none of this has been financial advice. Crypto is risky. less risky than when Dan started, but you could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.