By: The Master Investor Podcast with Wilfred Frost

Compiled by: Plain Language Blockchain

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

Summary of key viewpoints

Most institutional investors still have a 0.0% position on blockchain, literally zero.
It's not gold that's hitting a new high, it's paper money that's hitting a new historical low.
This may be the first deal in history where "smart money" entered the market last.
The average age of first-time homebuyers in the United States has been pushed back from 28 to 40.
We are facing a generational turning point where currency is becoming increasingly separate from the state.
Stablecoins are very likely to take away half of bank deposits within a decade.
Bitcoin has reached escape velocity, and I can't find any factor that could derail this process.
If you have no exposure to blockchain, you're essentially shorting this trend.

01. "Still the most asymmetric trade in history"

Host: Last time you came, we had an in-depth discussion about the macro logic of cryptocurrencies. The price at which you first bought Bitcoin was incredibly low, what was it again?

Dan Morehead: $65.

Host: $65, compared to our current price of around $66,000, it's like two different worlds. In that episode, you described Bitcoin as "the most asymmetric transaction in history." Do you still hold that view today?

Dan Morehead: Yes, I remain convinced of that. Throughout my career, I've been looking for asymmetric opportunities where the upside potential far outweighs the downside risk. Bitcoin, and the broader crypto space, represents the most asymmetric trading opportunity I've ever seen.

In the early stages, I would tell people: you could very well lose all your principal, so don't invest more than you can afford. But at the same time, you could potentially earn 5, 10, or even a thousand times your initial investment.

My reason for remaining bullish is that we are still in the very early stages. Most institutional investors still have a 0.0% position in blockchain and cryptocurrencies. Literally zero. This asymmetry will not disappear as long as the downside risks are negligible relative to the vast volume of global financial assets, and the upside potential is to redefine the entire monetary system.

02. The four-year cycle has come true again.

Host: Our last recording was on October 12th, which was an interesting time. Cryptocurrencies reached a temporary high around October 6th, followed by a pullback. Since then, Bitcoin has fallen by about 50%. As someone who has experienced multiple cycles, how do you interpret this major drop?

Dan Morehead: Anything that attempts to change the world is accompanied by a lot of hype and volatility. At the peak, optimism is at its highest, and at the trough, pessimism abounds. Pantera has been in this industry for 13 years, experiencing four complete four-year cycles. These cycles are actually quite regular, even predictable.

When we met in October, we were near the highs we had predicted two or three years prior. Based on our models from the previous three cycles, we projected that Bitcoin would reach a temporary peak around August 2025. While we hoped then that this time we would see a different outcome, perhaps with new government policies disrupting the cycle, in hindsight, the cyclical pattern has once again materialized. The market has fallen by 50%. That sounds like a lot, but compared to the 85% drops often seen in previous cycles, this is actually quite mild. The market may need about a year to bottom out, consistent with past patterns.

Host: You didn't show any bearish sentiment at the time. Did you think this cycle would eventually see a 75% to 80% drop like before?

Dan Morehead: This is a key question. I certainly didn't predict it would fall this much because there were many positive factors at the time. But the market has its own rhythm. I would like to point out that at previous highs, prices deviated significantly from the long-term logarithmic trend line, exhibiting a wildly parabolic trajectory. For example, in 2013, prices increased tenfold in the four months leading up to the high. This time, however, prices haven't experienced that extreme overheating; they've simply returned to roughly 2021 levels.

Therefore, I believe the current price level is roughly at the bottom range. Although it may take another six to eight months to establish a bottom , if you have an investment perspective of four to five years, now is a very attractive position.

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

Dan Morehead: I'm not good at technical analysis. We never try to do ultra-short-term timing trades. We manage our money more like venture capital, with a 5-year, 10-year, or even 20-year perspective. From that perspective, the current price is quite cheap.

03. Why is Bitcoin always the first to be dumped?

Host: Why is Bitcoin always the "scapegoat" for risky assets? When the Nasdaq and S&P 500 peak, cryptocurrencies are often the first to be sold off. Will this continue indefinitely?

Dan Morehead: That's a very insightful observation. Think about it: if a major shock occurs outside of trading hours, Monday through Friday, you can't sell your stocks. Cryptocurrency, on the other hand, is the only highly liquid market in the world with a market capitalization of $2 trillion that's open 24/7, 365 days a year.

When geopolitical crises erupt, institutions want to immediately reduce their risk exposure, and Bitcoin becomes their only asset that can be liquidated instantly. This leads to excessive selling pressure on it in the short term. However, it's important to note that while the correlation spikes during "flash crashes," in the long run, Bitcoin's correlation with the S&P 500 is actually very low, roughly between 0.1 and 0.2 . Over a multi-year timeframe, cryptocurrencies tend to rise independently, while traditional assets may simply stagnate.

04. It's not gold that hits a new high, but paper money that hits a new historical low.

Host: Let's talk about gold. Gold has risen 55% in the past 12 months, while Bitcoin has remained largely flat. Does this shake Bitcoin's narrative as "digital gold"?

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

But I approach this issue from a slightly different angle: it's not gold or real estate that's hitting new highs, but rather paper money that's hitting historic lows . As the printing presses keep running, the amount of paper money needed to buy a fixed amount of assets inevitably increases. The word "pound sterling" originally represented one pound of pure silver; now you need hundreds of banknotes to buy the same weight of silver. Governments can print money indefinitely, and this is the core of devaluation.

Host: Aren't we currently in an alarming period of currency devaluation?

Dan Morehead: Absolutely. The Fed's definition of "price stability" as a 2% annual depreciation is absurd. Stability should be zero. Even with only a 2% annual depreciation, a person's purchasing power will shrink by nearly 90% over a lifetime. (Editor's note: Compound interest, at a 2% annual depreciation rate, purchasing power shrinks by about 80% after 80 years.) I think people are waking up to the fact that they must hold a fixed amount of hard assets, whether it's stocks, gold, or cryptocurrencies.

This devaluation trade also exhibits a clear generational characteristic. Massive money printing has driven up asset prices, benefiting older generations who already own property and stocks, but squeezing the upward mobility of younger generations. The average age of first-time homebuyers in the US has been pushed back from 28 to 40. Since wealth accumulation through traditional paths is no longer feasible, turning to cryptocurrencies is a very rational choice for the younger generation. If you look at the wage growth and housing price growth curves since 1990, you'll find that the gap has become ridiculously large.

05. Separation of currency from the state

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

Dan Morehead: War always brings persistent inflation. But more importantly, we are witnessing a "separation of currency from the state." In ancient times, currency was gold, naturally independent of the government. Later, governments monopolized the power to print money, but they proved to be poor managers.

Over the next decade, people will gradually realize that currency does not need state backing. Geopolitical conflicts make this trend even clearer—the world is becoming increasingly segmented. If you are from a country not aligned with the US, or if you are worried about your assets being sanctioned or frozen, you will want an asset that is not controlled by any single country. China has historically invested a large portion of its foreign exchange reserves in US Treasury bonds, which is becoming increasingly risky in the current international landscape. As an asset independent of the banking system and sanctions, Bitcoin's value is actually highlighted in conflicts.

06. "Smart money" actually entered the market last.

Host: How many people actually hold cryptocurrency right now? Globally, how many large institutional holdings are there?

Dan Morehead: Still very few. While there are three to four hundred million people holding cryptocurrency globally, most are small, "hobbyist" holdings. However, I believe that within ten years, due to the widespread adoption of smartphones (4 billion users globally), most people will be using cryptocurrency. Its cross-border transfers are fast, virtually free, and require no one's permission.

This could be the first trade in history where "smart money" is the last to enter . In all the investment opportunities I've seen over the past 40 years, Wall Street has typically profited first, with retail investors left holding the bag. This time, however, it's completely reversed; individual investors are leading the charge. I've shared the stage with many alternative investment moguls managing hundreds of billions of dollars, many of whom knew absolutely nothing about Bitcoin.

This is why I'm so bullish— these smart, wealthy institutional funds will eventually enter the market. Coinbase is already included in the S&P 500. If you don't have any exposure to blockchain, you're essentially shorting this trend.

07. Policy shifts from hostile to favorable

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

Dan Morehead: This is a huge tailwind. The previous administration took a hostile stance towards blockchain, targeting Coinbase and cracking down on Ripple. The current administration is willing to build the industry. While the pace of legislation is always frustrating, frankly, the fact that Congress is taking the time to discuss topics like "stablecoin market structure" speaks volumes about the industry's changing status.

Regarding stablecoins, this is a revolution unfolding in stages . Currently, stablecoins may not be fully paying interest yet, but that's only a matter of time. Stablecoins are eroding the market share of bank deposits. Currently, the market capitalization of stablecoins is approximately $400 billion, while bank deposits total $17 trillion. (Editor's note: As of March 2026, the total market capitalization of stablecoins is estimated at $300-320 billion, source: DefiLlama, CoinDesk, and other data platforms.) In the next decade, stablecoins are highly likely to take away half of bank deposits because they are available 24/7 on mobile devices, offering a far superior experience compared to traditional banks.

08. Will a strategic Bitcoin reserve be established?

Host: You're also paying attention to digital asset treasury companies, such as MicroStrategy. Do you think governments will establish strategic Bitcoin reserves in the future?

Dan Morehead: I think this is highly likely. The US already has a considerable reserve of digital assets, mostly from law enforcement seizures. Now they're no longer selling these assets, and may even be starting to increase their holdings. Countries allied with the US will follow suit for strategic reasons, while countries opposing the US will buy for defensive purposes. This will take time to move through the political machine , but the trend is irreversible.

09. Why Solana?

Host: In the competition for Layer 1, why are you particularly optimistic about Solana?

Dan Morehead: We hold Bitcoin long-term, but Bitcoin focuses on value storage and can't handle tens of thousands of high-frequency transactions per second. Solana was designed for high performance, lower cost, and faster speed, making it suitable for complex applications like gaming and high-frequency trading. Just as the internet has Google and Facebook, the blockchain space will have several core Layer 1 blockchains . Bitcoin is gold, and Solana could be the digital superhighway.

10. Is it reasonable for Nasdaq to drop 12% and Bitcoin to drop 50%?

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

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

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

In contrast , cryptocurrencies are 50% below their long-term trendline . From an asset allocation perspective, cryptocurrencies are currently in a highly attractive oversold zone. Even if the Nasdaq continues to decline, I believe cryptocurrencies will outperform over the next two years.

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

Host: How is your mindset different now compared to when you were in the bear markets of 2014 and 2018?

Dan Morehead: Completely different. In the early days, I did have moments of fear, worried that the entire experiment would be ruined by a hack or regulatory crackdown. But after the collapse of Mt. Gox, multiple 85% pullbacks, and repeated regulatory crackdowns, the industry not only survived but has grown stronger. It has reached escape velocity.

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

Dan Morehead: A few years ago, I made a long list of risks, including hosting security, hacking, and regulatory uncertainty. But looking back now, most of those risks have been mitigated. While no one can guarantee that nothing will happen tomorrow, logically, I can no longer find any factors that could completely derail this process. A smartphone-based, globalized monetary system is an inevitable direction for human society . With 4 billion mobile phone users worldwide, the financial inclusion brought by blockchain is far more important than sharing photos on social media.

UBS: Gold still has a chance to reach new highs this year, with an average price of $5,000 for the year.

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